Consist of granting foreign currency-denominated guarantees. Some foreign trade transactions take place through international tenders that require bank guarantees.
- Commission.
- Expenses remittable to cover the costs of advice and confirmation by the overseas bank, when applicable.
The most common and recognized are:
|
Guarantee |
Coverage |
Amount |
Term |
|
Bid Bond |
Reimbursement of losses arising from the bidder’s refusal to sign the agreement after winning a tender. |
Usually 5% to 10% of the amount of the Proposal |
Term of the tender. |
|
Performance Bond |
Reimbursement of losses caused by non-fulfillment of the agreement between the parties. |
Reimbursement amount as set forth in the agreement. |
Tenor of the Agreement. |
|
Advance Payment Guarantee |
Reimbursement of advance payments under an agreement between the parties which has not been fulfilled. |
The amount of the advance payment plus charges. |
Tenor of the Agreement. |
|
Stand By |
Repayment of loans. |
Loan amount plus charges. |
Term of the Loan. |
|
Aval |
On foreign currency drafts issued by a foreign exporter of goods and services against a Brazilian importer. |
Amount of the draft. |
Term of the draft. |