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Posted on Tuesday, 10 May 2011 11:52AM by
The new Bond Support Scheme enables the Export Credits Guarantee Department (ECGD) to work with the Government in sharing the risk with lending banks on the issue of contract bonds.

Under the scheme, ECGD provides partial guarantees to banks under a master bond support agreement in respect of UK exports. There is no minimum or maximum value for each bond, although the total value of bonds to be issued under each export contract must be greater than £1 million.

The scheme will typically guarantee 50% of the full value of a bond. For advance payment and progress payment bonds, it may guarantee up to 80% of their value.

The benefits of the scheme are:

  • The guaranteed bank is able to issue the bond (or procure its issue by an overseas bank) even if it doesn’t have sufficient risk appetite on the exporter for the full amount.
  • The bank receives a guarantee from ECGD to cover the percentage of the amount due to it if the exporter fails to reimburse the bank following a call being made on the bond by the buyer.
  • The bank can, for the duration of our guarantee, increase its risk appetite for the exporter.
  • For advance payment and progress payment bonds, the bank can increase the amount of working capital available to the exporter.
Exporters in the UK are invited to apply at any time. The scheme can only be accessed through banks that have signed up to participate in the scheme.

Click here for further details (opens in new window).