ADVERTORIAL
DURING THE LOCKDOWN WE’VE GAINED SOME INVALUABLE INSIGHT INTO ARRANGING BONDS IN THE CURRENT CLIMATE FOR OUR EXISTING CLIENTS.
What type of extra information are the bond providers looking for?
DESPITE THE CURRENT CORONAVIRUS PANDEMIC PERFORMANCE BONDS REMAIN AVAILABLE IN THE CONSTRUCTION MARKET By Giles Ham, Head of Surety, Kerry London
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t’s fair to say that the Coronavirus pandemic has had a huge impact on the construction market. One specific area we have received a large proportion of interest in at Kerry London is the ongoing ability to source performance bonds. We’ve been fielding numerous enquiries from our existing clients, as well as helping new ones with potential placements. In light of this, I thought it would be helpful to provide a general overview of the market appetite right now. Thankfully for the construction sector, a good number of the bond providers we use at Kerry London are still very much open for business. That said, as you would no doubt expect, they have unquestionably adopted a far more cautious and considered approach. As is the case with many businesses, they have adapted their processes, as well as adding a number of more detailed levels of checking to their evaluation and ultimate decision-making.
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NETWORKS
Specifically, providers are looking at businesses’ short-term resilience to the current situation. This will include any actions that they have taken in the last few months, as well as an overall ability to maintain that resilience in the immediate future. During the lockdown we’ve gained some invaluable insight into arranging bonds in the current climate for our existing clients. This has allowed me to put together a list of the key additional points bond providers are looking for. I thought it would be helpful to share this with you so that you can be as prepared as possible should you be looking to arrange a bond now, or in the near future. I should state that by no means is this list exhaustive, and other bond providers may well ask or different points, but it should provide you with some good guidance.
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An up to date Cashflow Forecast (for at least the next 12 weeks) – to include expected income for current work in progress and projected company (group) bank balances.
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Evidence of actions that have been taken to reduce costs. Such things include details of ‘payment holidays’ or reductions in amounts payable to HP/finance providers.
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Details of precautions / processes that have been implemented on site.
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Percentage of workforce on each of your sites currently and whether any have been, or remain, furloughed.
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Any recent discussion with your bank[s] and detail on the outcome.
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Whether you have applied for Government Aid.
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Latest management information (consolidated if appropriate).
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Whether employers are currently paying you promptly, as per the contract terms.
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Whether or not the company has issued an ‘extension of time’ notice to the employer for any of the sites.
As well as this, in general, the terms being offered are on a stricter level of wording, specifically on the release event. If you already have a bond, or bonds in place my advice is to keep a good flow of communication with your insurer, providing regular updates. This is particularly key for those that are close to the release event, or even overdue. Like so much of life right now, a good deal of openness and a shared sense of pragmatism are the best ways to approach things.
You can find out more at our website www.kerrylondon.co.uk or drop the team an email using bonds@kerrylondon.co.uk and we’ll get back to you straight away.
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