Bond Insurance

Under the Portuguese Export Credit System, Bonding Insurance may apply to any legal or contractual obligation entered into by the Portuguese exporter under an export contract.

These bonds are functionally equivalent to guarantees provided by financial institutions.

All Portuguese exporting companies that have to provide bonds or guarantees for the fulfillment of contractual obligations related to export contracts, in cases where the private market has no capacity to respond, namely in higher-risk markets and guarantees on first demand.

Bonds can be given directly to the Beneficiary or to a bank which will be the beneficiary of a counter-guarantee issued at request:

• Direct Bond: COSEC provides the guarantee directly to the Beneficiary, who receives the indemnifications resulting from the verification of eventual claims;
• Indirect Bond: COSEC ensures the financing institutions or insurers that have provided their direct guarantee to the Beneficiary. In this case, the indemnification for non-compliance by the Policyholder shall be reimbursed directly in favor of these financial institutions or insurers, in case the guarantees provided by them in favor of the Beneficiary are executed.

The most usual types of bonds are:

• Bid bonds
• Advance payment bonds.
• Performance bonds.
• Retention payment bonds.

The security may be subject to an "on first demand”, "at first call”, or "at first request" clause. In this case, the Beneficiary of the security has the right to execute it without having to justify the reasons for this request and to demand of the insurer the immediate payment of the respective indemnification.

• Previous risk assessment of the Policyholder's financial situation, made by COSEC.
• The execution of the bond does not directly impact the Policyholder’s funds.
• Ensures the payment of a pecuniary compensation, after the losses suffered have been ascertained and shared.
• Alleviation of the collaterals granted to the banks.

_{The information provided on this page does not exempt the consultation of the legally required pre-contractual and contractual information.}