A bond is a financial instrument that protects interests and guarantees obligations across a number of parties for a project or service.

The parties involved are:


The entity tendering a project that the surety/bond is obligated to.


The provider of the bond.


The entity contracted to complete a project, responsible for providing cash down/ a bond.

The Obligee may require cash or a bond to be provided by the Principal as a financial guarantee to meet their contractual or statutory obligations to the Obligee. Should the parties agree that a surety bond is acceptable in lieu of cash, the Lex Group specialises in sourcing the most attractive terms from a network of Sureties that we have excellent relationships with. The Surety will propose terms and once agreed by all parties, a bond can be executed.

Surety offers additional credit and financial head room. The Lex Group ensures that the Principal’s balance sheet and pipeline are used to strengthen relationships between the Surety and the Principal. The Surety provides a guarantor service but to do so they must be secure in the risk, unlike a bank whose security is often cash and deeds as collateral.

Bonds give distinct advantages including:

  1. Offers greater flexibility to build balance sheets and increase head room.
  2. Premiums are a % of the overall bond required, so you don’t pay the entire bond value required by the Obligee.
  3. Working capital isn’t tied up as cash collateral for the duration of a project, which could be years.