What is the Financial Guarantee Market?
The financial guarantee market is a segment of the financial services industry whereby a third-party institution (for instance, a bank or insurance company) promises to assume responsibility for the financial obligations of a borrower or issuer if that borrower fails to meet them. In effect, this guarantee reduces the risk for the creditor or investor and improves the credit‐worthiness of the borrower or the instrument. Common guarantee instruments include bank guarantees, letters of credit, standby letters of credit (SBLCs), bond guarantees, export credit guarantees and other assurance mechanisms.
Market Landscape & Size
The global financial guarantee market is estimated to be worth tens of billions of U.S. dollars, with some recent figures placing it around USD 40-45 billion in 2023-24 and projecting it to grow to USD 70-100+ billion over the next 5-10 years.
Growth rates (compound annual growth rate, CAGR) in many studies are in…