Energy On-Demand Payment Bonds | Allianz Trade in Canada

What are On-Demand Payment Bonds?

Allianz Trade offers On-Demand Payment (ODP) bonds that provide collateral for assurance in the Energy industry to help accelerate growth and increase liquidity.

On-Demand Payment bonds are accepted assurance methods that offer several key advantages.

100% risk cover
Maximizes working capital by reducing the capital constrained by posting requirements
Bond is unsecured and ‘callable’ at any time during the coverage period
Bond pays out within the same time frame as other instruments
Priced competitively
Premium paid by Principal
Expanded collateral optionality

How do On-Demand Payment Bonds work?

Independent System Operators (ISO) Payment Bonds

ODPs work for obligations under standard ISO operating agreements and collateral obligations related to ISO auctions. An ISO member can build a bonding facility with Allianz Trade to support its bidding strategies and utilize the bond as a principal when they are required to post collateral.

Allianz Trade supports two type of ISO on-demand payment bonds; ISO Standard Operating Agreement and ISO/Assurance Auctions (subject to acceptance by each ISO).

Commodity Supply Payment Bonds

ODPs work for payment obligations under industry standard commodity supply contracts for spot or term transactions (crude, natural gas, power, refined products),as well as for custom negotiated commodity transactions. The counterparties can agree to use a bond and the principal can post a bond to the obligee when they are required to post collateral and/or are short credit.

Pipeline and Processing Payment Bonds

ODPs work for all obligations under standard short- or long-term pipeline construction/precedent agreements, pipeline transportation agreements, and commodity processing agreements. The shipper or producer utilizes the bond as a principal when they are required to post collateral.

Allianz Trade supports three kinds of pipeline and processing payment bonds; Pipeline Precedent Agreements, Pipeline Transportation Agreements, and Commodity Processing Agreements.

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