What we do

Bond Guarantee

A Bond Guarantee covers the risk of a foreign buyer’s unfair calling of a bond issued by you to the customer.

  • Advantages of Bond Guarantee

    What are the advantages of a Bond Guarantee?
    Helps you provide guarantees. A Bond Guarantee helps you provide a bid bond, advance payment bond or performance bonds without running the risk of losing everything.

    Compensation for loss
    You will be compensated for any loss you suffer if your customer makes an unfair call on the bond issued by you in connection with an export order. For example, if your customer claims that you defaulted on delivery, or due to political unrest in the country.

    No reason to be nervous
    A Bond Guarantee allows you to accept orders from markets that you would otherwise be unwilling to venture into. Although you do not know the customer, your risk is limited.

    Backed by the Danish government
    Should your foreign customer make an unfair call on the bond, the demand for payment will be backed by the Danish government. That makes a difference when claims, if any, are to be recovered.
  • What is Bond Guarantee?

    Foreign buyers may demand the issuance of a bond that you will deliver the goods or services as agreed.
    Sometimes – even when you deliver as agreed – a customer will make an unfair call on the bond. With a Bond Guarantee, we can insure you against the risk of having to pay the guarantee amount if the buyer makes an unfair call on the bond.

    For example, if your customer unfairly claims that you have defaulted on delivery and calls the bond.
    The Bond Guarantee also protects you against loss if the customer calls the bond because political uncertainty arises in the country. For example, if the authorities prevent you from supplying the goods or if an international embargo is placed on trade with the country.

    If something goes wrong, we will pay compensation to you.
  • How does Bond Guarantee work?

    ​As part of the contract, the foreign buyer demands that your company issues a bond that it will honour the terms of its original bid or offer, as surety for down payment for the order, or for fulfilment of the order.
    ​A Bond Guarantee covers your loss in the event of unwarranted calling of the bond by the foreign buyer.
  • What does Bond Guarantee cost?

    EKF charges a premium for issuing a Bond Guarantee.
    We determine the premium based on:
     
    Industry analysis: EKF assesses the situation and the opportunities in your industry.
     
    The buyer’s credit rating: EKF assesses the buyer’s credit rating, i.e. the likelihood that the customer will pay. The higher the credit rating, the lower the premium.
     
    The political situation in the buyer’s country: EKF assesses the risk of political unrest in your customer’s country. The lower the risk of political unrest, the lower the premium.
    Two price examples
    The price of a one-year guarantee to a customer in Mexico is 0.5% of the risk amountwhen you pay up-front. The customer has the lowest acceptable credit rating, while Mexico is assessed as a relatively attractive country for doing business.
     
    The price of a one-year guarantee to a customer in Albania is 1% of the risk amount when you pay up-front.. The customer has a higher than average credit rating in Albania. On the other hand, the country has significant political risk.
     
    A Bond Guarantee will also involve costs to your bank. Your bank can give you the total price.
  • Terms & conditions regarding Bond Guarantee

    Who is eligible for a Bond Guarantee?
    All exporters are eligible.
     
    How much does a Bond Guarantee cover?
    No limit applies to the amount covered by a Bond Guarantee.
     
    What is the term of a Bond Guarantee?
    The term of the guarantee depends on the agreement between your company and the customer. The term is often longer for a performance bond than for a bid bond or an advance payment bond.
     
    Environmental and social sustainability requirements
    When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights. 
    What does EKF cover?
    If you take out a Bond Guarantee, EKF will pay compensation if you make losses on export transactions as a result of commercial or political risks.

    Commercial risk
    means that your buyer is unable to pay due to liquidation, insolvency or cancellation of the contract, or that the buyer is unwilling to pay.
     
    Political risk occurs when you do not receive payment for products due to impediments in the country you are exporting to. Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
     
    As a rule, EKF pays a maximum of 90% of the loss in compensation to your company. As an exporter, you usually have to cover a deductible of at least 10%.

Advantages of Bond Guarantee

What are the advantages of a Bond Guarantee?
Helps you provide guarantees. A Bond Guarantee helps you provide a bid bond, advance payment bond or performance bonds without running the risk of losing everything.

Compensation for loss
You will be compensated for any loss you suffer if your customer makes an unfair call on the bond issued by you in connection with an export order. For example, if your customer claims that you defaulted on delivery, or due to political unrest in the country.

No reason to be nervous
A Bond Guarantee allows you to accept orders from markets that you would otherwise be unwilling to venture into. Although you do not know the customer, your risk is limited.

Backed by the Danish government
Should your foreign customer make an unfair call on the bond, the demand for payment will be backed by the Danish government. That makes a difference when claims, if any, are to be recovered.

What is Bond Guarantee?

Foreign buyers may demand the issuance of a bond that you will deliver the goods or services as agreed.
Sometimes – even when you deliver as agreed – a customer will make an unfair call on the bond. With a Bond Guarantee, we can insure you against the risk of having to pay the guarantee amount if the buyer makes an unfair call on the bond.

For example, if your customer unfairly claims that you have defaulted on delivery and calls the bond.
The Bond Guarantee also protects you against loss if the customer calls the bond because political uncertainty arises in the country. For example, if the authorities prevent you from supplying the goods or if an international embargo is placed on trade with the country.

If something goes wrong, we will pay compensation to you.

How does Bond Guarantee work?

​As part of the contract, the foreign buyer demands that your company issues a bond that it will honour the terms of its original bid or offer, as surety for down payment for the order, or for fulfilment of the order.
​A Bond Guarantee covers your loss in the event of unwarranted calling of the bond by the foreign buyer.

What does Bond Guarantee cost?

EKF charges a premium for issuing a Bond Guarantee.
We determine the premium based on:
 
Industry analysis: EKF assesses the situation and the opportunities in your industry.
 
The buyer’s credit rating: EKF assesses the buyer’s credit rating, i.e. the likelihood that the customer will pay. The higher the credit rating, the lower the premium.
 
The political situation in the buyer’s country: EKF assesses the risk of political unrest in your customer’s country. The lower the risk of political unrest, the lower the premium.
Two price examples
The price of a one-year guarantee to a customer in Mexico is 0.5% of the risk amountwhen you pay up-front. The customer has the lowest acceptable credit rating, while Mexico is assessed as a relatively attractive country for doing business.
 
The price of a one-year guarantee to a customer in Albania is 1% of the risk amount when you pay up-front.. The customer has a higher than average credit rating in Albania. On the other hand, the country has significant political risk.
 
A Bond Guarantee will also involve costs to your bank. Your bank can give you the total price.

Terms & conditions regarding Bond Guarantee

Who is eligible for a Bond Guarantee?
All exporters are eligible.
 
How much does a Bond Guarantee cover?
No limit applies to the amount covered by a Bond Guarantee.
 
What is the term of a Bond Guarantee?
The term of the guarantee depends on the agreement between your company and the customer. The term is often longer for a performance bond than for a bid bond or an advance payment bond.
 
Environmental and social sustainability requirements
When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights. 
What does EKF cover?
If you take out a Bond Guarantee, EKF will pay compensation if you make losses on export transactions as a result of commercial or political risks.

Commercial risk
means that your buyer is unable to pay due to liquidation, insolvency or cancellation of the contract, or that the buyer is unwilling to pay.
 
Political risk occurs when you do not receive payment for products due to impediments in the country you are exporting to. Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
 
As a rule, EKF pays a maximum of 90% of the loss in compensation to your company. As an exporter, you usually have to cover a deductible of at least 10%.
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