Confirmed letter of credit

内容关于保兑信用证

Standby Letter of Credit

A standby letter of credit (SLOC) is a legal document issued by a financial institution on behalf of a borrower, guaranteeing a lender will receive payment in case the borrower defaults on their obligations. It’s a promise to pay from a third party -- in this case, a bank -- in the event of a breach of contract.

But a standby letter of credit is not the same as a loan guarantee or a bond. It’s a guarantee of payment but not of performance. The issuing bank does not guarantee that the borrower will fulfill their end of the deal; the bank is just saying that if the borrower fails to make the agreed payment, then the bank will step in.

SLOCs are an effective tool for lenders who don’t have the option of a loan guarantee or bond, as such instruments are often expensive, time-consuming and restrictive. The separate, free-standing document is a flexible and effective option when dealing with different types of trade financing, such as import/export transactions and construction projects.

The issuer of the SLOC becomes the guarantor, while the beneficiary of the document is the creditor. So if the borrower defaults, the beneficiary can make a claim on the SLOC. The issuer will send a payment in the amount of the SLOC to the beneficiary, or replace the item or provide the service instead.

All slocs are negotiable documents, so you can customize the terms and conditions in a contract. That means you can decide on the maximum SLOC amount, the expiration date and the method of payment. You can also specify if the SLOC should pay an interest rate, a fee or a penalty.

When a standby letter of credit is used as a guarantee for a loan or as a form of surety bond, it acts as a form of collateral. By having a third-party guarantee the loan or bond, lenders can feel more confident in their investment because the SLOC will be in place to protect them if the borrower fails to meet their obligations.

Standby letters of credit are widely used in international trade. They are often used by importers when dealing with an overseas supplier. This type of SLOC reduces the risk of nonpayment by providing the supplier with a guarantee that they’ll receive payment even if the importer can’t meet their end of the bargain.

Overall, standby letters of credit are a great way to facilitate trade financing, guarantee payment and provide a lender with protections if the borrower defaults. If you’re looking for a secure, cost-effective way of borrowing money, or if you’re a lender or exporter looking for reliable protection in the event of a default, then a standby letter of credit may be a good option for you.

BACK-TO-BACK DOCUMENTARY CREDIT

A back-to-back documentary credit (BBDC) is an arrangement that facilitates the establishment of two separate documentary credits (“primary” and “secondary” documentary credits), whereby the exporter receives payment as per the terms of the primary documentary credit, and the importer receives payment as per the terms of the secondary documentary credit.

One of the main benefits of BBDC is that the issuing bank of the secondary documentary credit pays the exporter upon providing the documents required under the primary documentary credit, without depending on another banks compliance with the terms of the primary documentary credit. This means that the exporter can be sure of payment without any risks of delay.

BBDC is used in cross-trade arrangements. For example, a party in Europe may enter into an arrangement with a party in the United States to meet the requirements of both the European importer and the United States exporter. The European party is the beneficiary of the primary documentary credit, and the US party is the beneficiary of the secondary documentary credit. In this example, the primary documentary credit is issued from Europe to the US exporter, and the secondary documentary credit is issued from the US to the European importer.

The agreements between the parties must be properly drafted by a knowledgeable attorney. These agreements usually include, among other things, strict confirmations that the parties will use the proceeds of the respective credits as envisaged.

Documentary credits, primary and secondary, should be issued as per the International Chamber of Commerce (ICC) Uniform Customs and Practices (UCP) of Documentary Credits framework. This standard ensures that the terms and conditions of the BBDC are properly set out, and that the parties involved are adequately protected.

While BBDC is a useful and relatively secure form of transaction, it is important to adhere to all the relevant regulations and guidelines to fully take advantage of its benefits. Moreover, it should be remembered that a BBDC does not have any bearing on the relationship between the contracting parties and does not create a guarantee for services or goods. However, for international traders who are seeking to ensure the security of payments between different nations, a BBDC can be a very useful tool.

双程保兑信用证

双程保兑信用证(BBDC)是一种安排，有助于建立两个独立的单据信用证 (“主要”和“次要”单据信用证)，其中出口商按照主要单据信用的条款收到款项，进口商按照Sec补充单据信用的条款收到款项。

BBDC的主要优点之一是，副单据信用的开证行在提供主单据信用要求的文件时即支付给出口商，而不依赖另一家银行遵守主单据信用的条款。这意味着出口商可以收到款项，而无需担心延误的风险。

BBDC用于越境交易安排。例如，欧洲方可能与美国方签订协议，以满足欧洲进口商和美国出口商的要求。欧洲方是主要单据信用的受益人，美国方是副单据信用的受益人。在这个例子中，主单据信用是从欧洲发出给美国出口商的，而副单据信用是从美国发出给欧洲进口商的。

双方的协议必须由知识渊博的律师精心起草。这些协议通常包括，除其他内容外，严格确认各方将按预期使用各自信贷款的收益。

单据信用，主要的和次要的，应按照国际商会(ICC)单据信用制度统一惯例(UCP)来开出。这个标准确保了BBDC的条款和条件得到适当规定，并且涉及的各方得到充分保护。

虽然BBDC是一种有用而相对安全的交易形式，但重要的是要遵守所有相关法规和指南，才能充分利用它的好处。此外，应记住的是，BBDC没有任何影响当事方之间的关系，也不为服务或商品提供任何保证。然而，对于寻求确保不同国家之间付款安全的国际贸易商来说，BBDC可以是一个非常有用的工具。