WHAT IS COMPLETION GUARANTEE GUARANTEE (CGB)?

Completion guarantee is a specialized surety transaction that primarily provides security and accountability to large-scale real estate and development projects, guaranteeing the successful execution and delivery of the project. Through this transaction, the risk of project non-completion is transferred to the guarantor, a specialized surety provider. Banks, insurance and reinsurance companies, surety companies, and private financial institutions can act as guarantors and provide surety.

The guarantor steps in if the housing company fails to fulfill its contractual obligations due to reasons such as bankruptcy, deviations from the original work plan or budget, mismanagement of funds, oversupply, or death. The nominal value of the guarantee provides the capital required to complete the remaining work.

The primary purpose of completion guarantee is to protect the financial interests of parties with rights or receivables in the construction.

 

An incomplete and non-income-generating asset creates devastating losses for those with receivables in the project. This guarantee protects the project against the risk of stalling by ensuring the provision of the necessary funds or resources to complete the work

 

DIFFERENCE FROM CONVENTIONAL INSURANCE?

Completion guarantee, unlike standard insurance, which covers sudden and unexpected events such as damage or liability, provides a clear performance guarantee. The distinction between suretyship, which is a financial guarantee, and standard insurance is crucial. This guarantee is not an insurance policy against external damage or failure of the project, but rather a financial guarantee for the project's success.

 

Unlike standard insurance, the guarantor expects to recover the full amount paid. It requires the housing company to commit to repayment, even by transferring assets in the project if necessary. Therefore, it is mandatory for the housing company to sign a "Completion Guarantee Indemnity Agreement". Despite its differences from standard insurance, both banks and insurance companies can act as arrangers for completion guarantees.

 

WHERE TO FIND CGB?

Completion guarantees can be obtained through Sufibond. Procedure:

- The first step is for the housing company to submit a guarantee request to Sufibond.

- Sufibond selects projects that meet the criteria and submits them to the guarantors.

- Guarantors declare limits for the projects they will guarantee.

- A tripartite guarantee agreement is signed between the guarantor, the housing company, and the bank (or insurance company) designated by Sufibond.

- Based on this agreement, called the Completion Guarantee Indemnity Agreement, the contracting bank (or insurance company) issues the Completion Guarantee Guarantee.

WHO ARE WE?

Our team, with banking and insurance backgrounds, has been providing project guarantees and project financing services through various domestic and international financial companies since 1991. To this end, our team, which conducts risk analysis, reporting, product design, and sourcing, has provided guarantees or resources for more than 600 international projects totaling over $50 billion in contracts.

 

Our special purpose company, Sufibond Financial Investments Trade Inc., provides completion guarantees for urban transformation and real estate projects in Turkey.

 

Our team specializes in project guarantees, bringing together companies seeking guarantees for their projects with financial institutions that can act as guarantors, ensuring the security of these projects. Sufibond works with special purpose banks, specialized financial institutions, insurance companies, reinsurance companies, equity companies, and funds capable of providing guarantees, even for large-scale projects, without any limits or ratings.

 

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