Comprehensive guarantee product suite
Tender guarantee (bid bond):
Usually issued for an amount between 1% and 2% of the contract value. It compensates the beneficiary for additional costs if the party submitting the tender does not take up the contract and it is then necessary to award it to another party.
Performance guarantee:
Usually issued for an amount between 5% and 12.5% of the contact value. This guarantee assures payment to the beneficiary if the contractor fails to fulfil contractual obligations.
Advance payment guarantee:
Enables the beneficiary to obtain a refund of advance payments made in the event of default by the applicant. It is issued for the full amount of the advance payment, but may contain reduction clauses, which may enable a reduction in the maximum amount upon evidence of progressive performance.
Retention money guarantee:
Most major projects call for stage payments as work progresses. Often the beneficiary retains a percentage of the payment (retention money) as cover for any hidden defects in the completed work. A retention money guarantee enables the immediate release of retention money to the applicant. The beneficiary can obtain a refund of retention money released, in the event of default by the applicant.
Payment guarantee:
This type of guarantee may be used as security for payment obligations.
Facility guarantee:
This type of guarantee is usually not trade related and may provide security to another bank to advance money to an individual or company. It is often used when a company does not have a credit record and wishes to expand offshore.
Maintenance guarantee:
Ensures the applicant does not abandon the contract after completion of the construction phase, but continues to honour maintenance obligations as per the original agreement.
Customs guarantee:
Applicants may need to import equipment temporarily to carry out a contract. Import duty will usually be payable, but the customs authorities will grant exemption if the contractor undertakes to re-export the equipment on completion of the contract. The contractor is required to provide the customs authority with this guarantee, which prevents selling the goods instead of re-exporting them.
Shipping guarantee:
Enables the buyer to obtain release of the goods from the carrier, despite the bill of lading being lost or delayed.
