Letters of credit, bank guarantees, and surety bonds can play an important role in supporting contractual obligations, managing counterparty risk, and preserving liquidity—but when is each instrument appropriate, and what should treasury consider when choosing among them?

Speakers will compare letters of credit, bank guarantees, and surety bonds from a treasury perspective, including how their use varies across industries and business scenarios and their potential impact on bank capacity, collateral requirements, cost, liquidity, and risk. Explain the fundamental differences among letters of credit, bank guarantees, and surety bonds and identify common business situations in which each may be used.

Learning Objectives:

1. Explain the fundamental differences among letters of credit, bank guarantees, and surety bonds and identify common business situations in which each may be used.

2. Compare available instruments based on treasury considerations including cost, collateral requirements, bank credit capacity, liquidity impact, and risk.

3. Identify industry and market trends influencing how organizations are using letters of credit, guarantees, and surety solutions.

4. Evaluate whether an existing guarantee structure could be modified or replaced to improve liquidity, or preserve financial flexibility, or reduce reliance on bank credit capacity.

Speakers:

• Gagan Sivia, Faculty - British Columbia Institute of Technology (BCIT)

• Nathan Hummel, Head Financial Institutions Practice - Rosenberg and Parker