Also known as downstream guaranty. A form of guaranty whereby a parent, as guarantor, assumes the responsibility for the payment or performance of an action or obligation of its subsidiary by agreeing to compensate the beneficiary in the event of such non-payment or performance.

This is in contrast to an upstream guaranty provided by a subsidiary of the debtor and a cross-stream guaranty provided by an affiliate of the debtor.

For more information, see Practice Note, Guaranties: Overview and Standard Document, Guaranty.