The beneficiary can assign the proceeds of a Bank Guarantee. But this assignment does not assign the rights of the beneficiary as “drawer” on the Bank Guarantee, and only the beneficiary may exercise the “drawer” rights and present the demand for payment under the terms of the Bank Guarantee unless the terms of the guarantee provide otherwise.
This means that the assignee may receive the proceeds of the guarantee, but in order to obtain those proceeds, the beneficiary must make the demand for payment. This also means that the beneficiary can sell by assignment at discount the benefits of the guarantee.
An assignment of proceeds requires notice to the issuing bank of this action; otherwise the issuing bank would pay the beneficiary rather than the assignee.
Transfer of Bank Guarantee – Bank Guarantee can be transferred to a third party ONLY with the written consent of the issuing bank AND the beneficiary.
No Public Market – There is no public market for the trading of Bank Guarantee. Beware! Fraudsters or naive brokers are always erroneously representing that there is a public market for the trading of Bank Guarantee (and standby letters of credit). This is not to be confused with the trading of other bank issued instruments such as medium term notes, etc. Bank Guarantee can only be transferred or the proceeds assigned in private transactions (See above).
No CUSIP or ISIN Numbering – Bank Guarantee are not trading securities, trading debt instruments, or trading investment funds, and therefore are not subject to the settlement procedures offered through Euroclear or DTC and most other settlement firms (and not Bloomberg).
Obviously, therefore, they also are not issued CUSIP or ISIN numbers for trading purposes. However, Euroclear may accept such Bank Guarantee for “safekeeping” purposes only, and it is not assigned an ISN or CUSIP number (though it may have a number for identification purposes).
So one has to be careful in understanding the particular legal relationship of a Bank Guarantee to Euroclear or other settlement entities, especially as to issues of authenticity. A Bank Guarantee may appear on the “screen”, but not for trading. It is also important to note, that a Bank Guarantee held in safekeeping does not serve to authenticate the instrument. Anything can be the subject of a safe keeping situation. Mixing a metaphor, you can get a safe keeping receipt for a ham sandwich.