The last few years has seen an increasing level of participation
by surety providers in syndicated bank facilities. From the bank
perspective this has been a response to reducing exposures and
concentrating on funding lines which provide better returns and
margins than bank guarantees/letters of credit.
From the surety perspective participation in syndicated bank
facilities provides:
- An opportunity to participate in bigger credits
- Access to borrower/contractor security
- Usually more detailed and comprehensive financial reporting and
covenants, and
- A defensive strategy against potential loss of clients
The purpose of this paper is to provide some insights and
commentary on the role of a surety in a syndicated bank facility.
The starting position is to consider the orthodox bilateral surety
– contractor structure and documentation.
