Bonding support for Australian exporters

Contract bonds, such as advance payment, performance or warranty bonds, are a basic requirement of many international tenders. If an exporter can’t provide the bond, they can’t compete for the contract. However, the value of the bond required may be a significant percentage of the contract value. To issue the bond, an exporter’s bank may require security for the full amount of the bond, tying up the exporter’s working capital and preventing them from pursuing other opportunities.

If you’re an exporter and your bank can’t help you with a contract bond, or you can’t provide all the security they require, assistance may be available from Export Finance and Insurance Corporation (EFIC), the Australian Government’s export credit agency. If you meet our eligibility criteria we can issue the bond to your buyer directly or in conjunction with your bank. Our security requirements are based on an individual assessment of your ability to perform the export contract, and the security we require may be less than the value of the bond. This enables you to meet your buyer’s requirements without consuming all your working capital.

EFIC recently provided performance bonds to support McConnell Dowell Corporation Limited in performing two contracts, worth over US$500 million, for the US$18 billion Papua New Guinea LNG project. The performance bonds, worth more than US$20 million, have been issued under an existing bonding line that EFIC provides to McConnell Dowell. A consortium led by ExxonMobil will develop and operate LNG export facilities in Papua New Guinea (PNG). McConnell Dowell’s contracts involve the construction of the new Komo Airfield in PNG and related infrastructure.

Under the bonding line, EFIC issues or guarantees bonds to support approved export contracts of McConnell Dowell. The bonding line was established in 2006 and has supported several of the company’s major construction contracts in Asia.
“The scope, complexity and location of our projects means bonds aren’t always available in the commercial market. Our ability to utilise EFIC’s bonding line has streamlined our process for securing international projects and freed up our finance and bonding facilities for local projects,” said CEO of McConnell Dowell David Robinson.

Contact: info@efic.gov.au