Sources say surety providers have managed to contain losses at around £60m.

While its still represents a big hit for the bonding market after two already torrid years, the exposure is well below the £160m body blow suffered by bond providers when Henry Projects collapsed.

It is also well below the level of bonding exposure at ISG two years ago, which stood at around £140m, indicating bond providers were winding down their exposure for many months.

The picture in the trade credit insurance market is expected to be even better for providers who pulled cover for ISG many months ago.

But critically this has impacted the supply chain leaving many more subcontractors and suppliers exposed to ISG’s collapse.

Chris Davies, managing director of broker DRS Bond Management, said: “The failure of ISG is likely to affect everybody’s bond line, but it could have been a lot worse.

“The surety market has settled into a new reality in the last six months after the squeeze following previous big contractor failures like Henry, Buckingham and Readie.”

He added: “The surety market is going to be challenging but not impossible for at least 12 months as a direct result of ISG.

“While premium rates may harden, it’s going to be the reduced appetite to support businesses with weak balance sheets and cash that will cause problems for some in the market.”