Bond Guarantee

The Bond Guarantee is counter security for the bank issuing a bond on behalf of the exporter in favour of a foreign buyer. 

An exporter can use the Bond Guarantee to cover the risk of unfair calling of the bond (90% coverage) or calling for political reasons (95% coverage).

Political risks include war, insurrection or other such event in the buyer’s country preventing the exporter from fulfilling the obligations under the contract, with the result that the buyer calls the bond. The guarantee does not cover situations in which the bond is called owing to the exporter’s actions.

The Bond Guarantee can be a counter security for a bank issuing a bond on behalf of the exporter in favour of a foreign buyer. If there is a claim, Finnvera recovers from the exporter the full indemnity paid to the bank.

The Bond Guarantee can also be used simultaneously both as a counter guarantee in favour of a bank and as risk insurance in favour of an exporter. The Bond Guarantee coverage for the bank is decided case by case.

The bond covered by the guarantee must be limited as to its amount and validity period. The bond may be issued by a Finnish or foreign bank or insurance company. The exporter may be a Finnish company, its foreign subsidiary or a consortium involving a significant Finnish party.

When considering the granting of a guarantee, Finnvera analyses the creditworthiness of the exporter, the buyer and the buyer’s country. The conditions for granting the guarantee  are also affected by the law governing the delivery contract and by the procedure selected for the settlement of disputes.

The guarantee premium is determined separately in each case. It depends on the risks covered and on the creditworthiness of the buyer, the buyer’s country and the exporter. A handling fee for handling the guarantee application and for any changes that are made to the guarantee are charged.