What is the difference between a bid bond and a bank guarantee?
The main difference is who issues it. The test that matters is whether the tender accepts that issuer and that wording.
| Point | Bid bond | Bank guarantee |
|---|---|---|
| Usual issuer | Insurance, bonding or surety company | Bank |
| World Bank works document | Accepted if it is an unconditional demand guarantee | Accepted if it is an unconditional demand guarantee |
| ADB works document | Not named in the list of forms | Named in the list of forms |
| Issuer outside the employer's country | World Bank: needs a correspondent institution there, unless the employer agrees in writing first | World Bank: bidders may use the bank of their choice in any eligible country |
| Wording | Must meet the demand guarantee test | Use the tender's form, or a similar format approved before submission |
Bid bond is a trade name, and buyers use it differently. Ask your issuer to copy the tender's form word for word.