Guarantees are one of the most important instruments available to BSTDB to stimulate credit and capital markets in the region, mobilize additional capital, encourage the capital investments from outside the region and provide facilities otherwise unavailable on reasonable terms. Operations involving guarantees are appraised, processed, and supervised in the same manner as those involving direct credit extensions and are subject to the same limits and requirements.

Guarantees are most often provided at the request of clients in favor of the beneficiary. The guarantee obligation is secondary to the primary obligation of the person whose performance has been guaranteed. On most occasions, the entity in whose favor the guarantee has been issued has to prove to the guarantor that default has occurred, but calls may as well be made on demand. Guarantees are normally drafted in conformity and including provisions of the International Chamber of Commerce (ICC) Uniform Rules for Demand Guarantees or the Uniform Rules for Contract Bonds, as appropriate.

BSTDB’s basic guarantee commission and fee structure may consist of front-end fees, exposure and/or periodic guarantee fees and commitment fee components which are meant to provide the Bank with an adequate compensation for the risks assumed and administrative expenses incurred. Guarantee fee pricing depends on the guarantee’s specific coverage and risks.

 

The obligor shall be liable for any additional fees and expenses including those associated with the appointment of any independent consultant required by the Bank at any stage of the project development.