For the purposes of this paper, SGs are defined as agreements under which a sovereign or assimilated entity ("Government") agrees to bear some or all of the downside risks of a PPP project. An SG is a secondary obligation. It legally binds the Government to take on an obligation if a specified event occurs. An SG constitutes a contingent liability, for which there is uncertainty as to whether the Government may be required to make payments, and if so, how much and when it will be required to pay. In practice, SGs are used when debt providers (e.g. commercial banks, national and international financial institutions, capital markets, hedging counterparties) are unwilling to lend to a PPP company as a result of concerns over credit risk and potential loan losses. SGs can also be used to benefit the equity investors in a PPP company when they require protection against the investment risks they bear.