Monetization and Trading

A Letter of Credit or Letter of Undertaking

A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Letters of credit are used extensively in the financing of international trade, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as an underwriter, where it assumes the counterparty risk of the buyer paying the seller for goods. The Standby Letter Of Credit (SBLC) is governed by a set of guidelines known as the Uniform Customs and Practice (UCP 600), which was first created in the 1930s by the International Chamber of Commerce (ICC). So What Is The Key difference: The ‘Letter of Credit’ and the ‘Standby Letter of Credit’ are two legal bank documents that are used by international traders. Both these letters are used to ensure the financial safety between the supplier and their buyers. And, SBLC is a type of LC that is used when there is a contingent upon the performance of the buyer and this letter is available with the seller to prove the buyer’s non-performance during the sale. top letters of credit providers, real SBLC Providers, genuine SBLC providers, lease sblc providers, lease bg sblc providers, bank instrument providers, Financial SBLC, Financial SBLC provider, Financial SBLC’s, SBLC discounting, SBLC Monetizers, HSBC LC and SLBC are the two financial instruments that are meant to safeguard the financial interests of the international traders i.e. buyers and sellers. It simply means that both these terms are widely useful while making transaction between the two trading parties. These help in giving financial security to both the parties. Also, these contracts are produced in good faith and in both the cases the fund gets mobilized

LETTER OF CREDIT (LC) IRREVOCABLE SWIFT MT700 & MT760
WHAT TYPES OF LETTER OF CREDIT DO WE PROVIDE?

At Sight Letter Of Credit (Sight LC)

An At Sight Letter of Credit is payable once it is presented to the issuing bank along with the all of the necessary documents.
An organization offering an At Sight Letter of Credit commits itself to paying the agreed amount of funds provided the all of the provisions of the letter of credit are met.
For example, a business owner may present a bill of exchange to a lender along with an at sight letter of credit and walk away with the necessary funds right away. An At Sight Letter of Credit is therefore considered more on-demand than other types of letters of credit.

Documentary Letter Of Credit (DLC)

A Documentary Letter Of Credit (DLC) is a promise of payment provided by a buyer/importer to a seller/exporter that is guaranteed by a particular bank. Once a DLC document is presented by the seller/exporter to the issuing bank, the bank is obliged to remit full payment to the seller.
The seller/exporter may be required to fulfill certain conditions listed in the Documentary Letter of Credit, such as providing proof of shipment of the goods sold to the buyer, before collecting payment from the bank.
This particular method of payment provides assurance to the seller/exporter that the buyer/importer has the necessary funds for the transaction and is ready to send payment to the seller after the sale is complete.

Usance Letter Of Credit (Usance LC)

An Usance Letter of Credit is a letter of credit that is payable at a specific time and after the presentation of certain necessary documents listed in the letter of credit.
Unlike an At Sight Letter of Credit, where the issuing bank pays the beneficiary of the letter of credit immediately after the issuing bank has had the required documents in the letter of credit presented to them, with an Usance Letter of Credit, the issuing bank will defer payment until the end of an agreed upon term and once the required documents are presented to the issuing bank.

Standby Letter Of Credit (SBLC)

What is SBLC funding & SBLC Financing? 

SBLC financing or SBLC funding is the process of using Sblc to obtain loan or financing from a bank.
What is Standby Letter of Credit (SBLC) Monetization?
How Do You Monetize SBLC?
SBLC Monetization or monetisation is the process of converting a standby letter of credit (Sblc) into money or legal tender. Sblc providers, Sblc funding, Sblc monetization in us no money down, SBLC Monetization, Sblc funding process, cost of Sblc, Sblc providers, SBLC Monetization process,

How to Monetize SBLC?
How to Obtain a Standby Letter?.
We can arrange and assist clients to discount or monetize sblc, or arrange a Non Recourse loan against a Standby Letter of Credit (SBLC) issued from prime banks.
The Standby Letter of Credit Monetization arrangement issues Non Recourse funds to the Client shortly after the Standby Letter of Credit (SBLC) is delivered to the Monetizer.

A Standby Letter of Credit (SBLC) is a guarantee of payment issued by an issuing bank on behalf of a client that is used as a “last resort payment” should the client fail to fulfil a contractual commitment with a third party.
Standby Letters of Credit (SBLC) are issued as a sign of good faith in business deals and are used as proof of a client’s credit capability and repayment abilities.
The bank issuing the SBLC will perform a brief underwriting procedure to ensure the credit worthiness of the party applying for the Standby Letter of Credit, before issuing the SBLC to its beneficiary.

WHAT IS A BANK GUARANTEE? (BG)

What Is A Bank Guarantee (BG)
A Bank Guarantee (BG) is very similar to a Letter Of Credit (LC) as they both are used for many types of business transactions (financial or performance based).
The real difference between the two is that a Letter Of Credit (LC) ensures that a business transaction goes as planned, whereas a Bank Guarantee (BG) reduces losses if a business transaction doesn’t go as planned.
A Bank Guarantee (BG) guarantees a certain sum to the beneficiary if the opposing party doesn’t fulfill its specific obligations under their agreed upon contract.
Bank Guarantees (BG) ensure both sides in a contractual agreement from credit risk.
​A construction company and its steel beam supplier may enter into a contractual agreement to build a new complex.
​Both sides might have to issue Bank Guarantees (BG) in order to prove their credit-worthiness to each other.
​In a case that the steel beam supplier fails to deliver steel beams to the job site per their agreed contractual agreement, the construction company would notify the issuing bank of the breach of terms agreed up in the Bank Guarantee (BG) and the bank would then pay the construction company the amount agreed upon in the Bank Guarantee (BG).

HOW DOES THE BANK GUARANTEE (BG)
PROCESS WORK?
Bank Guarantee Closing Process

Step 1: Application
Fill out and return the Bank Guarantee (BG) application with the documents for your deal. (Contract, Agreement, etc.)

Step 2: Issuing of Draft
A SWIFT MT760 draft of the Bank Guarantee (BG) will be created for you and your beneficiary to review.

Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your beneficiary and sign off on the draft (changes are free of cost).​
b) We issue you a payment invoice for the BG, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Bank Guarantee (BG) to the bank for issuance and delivery.

Step 4: Issuance
More often than not, the bank will issue the Bank Guarantee (BG) within 48 hours of release.
Once issued, a copy of the BG will be emailed to you as it is transmitted by a MT760 SWIFT message to the beneficiary, including the reference number of the BG.
Your seller’s bank will be able to receive and confirm the Bank Guarantee (BG) transmission soon thereafter.

What is a Standby Letter of Credit (SBLC / SLOC)?

A Standby Letter of Credit (SBLC / SLOC) is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is a payment of last resort from the bank, and ideally, is never meant to be used.

How can a contractual SBLC be used and how does it work?

An SBLC is frequently used as a safety mechanism for the beneficiary, in an attempt to hedge out risks associated with the trade. Simplistically, it is a guarantee of payment which will be issued by a bank on the behalf of a client. It is also perceived as a “payment of last resort” due to the circumstances under which it is called upon. The SBLC prevents contracts from going unfulfilled if a business declares bankruptcy or cannot otherwise meet financial obligations.

Furthermore, the presence of an SBLC is usually seen as a sign of good faith as it provides proof of the buyer’s credit quality and the ability to make payment. In order to set this up, a short underwriting duty is performed to ensure the credit quality of the party that is looking for a letter of credit. Once this has been performed, a notification is then sent to the bank of the party who requested the Letter of Credit  (typically the seller).

In the case of a default, the counter-party may have part of the finance paid back by the issuing bank under an SBLC. Standby Letter of Credits are used to promote confidence in companies because of this.

As it is insurance, there may be collateral that is needed in order to protect the bank in a default scenario – this may be with cash or assets such as property. The level of collateral required by the bank and by the size of the SBLC will largely depend on the risk involved, and the strength of the business.

BELOW IS THE DESCRIPTION OF LEASE BANK INSTRUMENTS (BG/SBLC/SLOC)

1. Instrument: Fully Cash Backed Bank Guarantee {BG} or Standby Letter of Credit {SBLC}
2. Total Face Value: USD 2Million (Min) to USD 500m (Max)
3. Issuing Bank: HSBC Hong Kong, Barclays Bank London or any prime Bank.
4. Age: One Year and One Day (with rolls and extensions where applicable)
5. Leasing Price: 4% (+ 2% brokers commission where applicable) 2% broker commission applies to clients that were introduced by brokers
6. Delivery: SWIFT MT-760
7. Payment: MT103 Wire Transfer
8. Hard Copy: Bonded Courier within 7 banking days.
9. Bank Transmission fee: Depends on the face value of the bank instrument Terms and Procedure for SBLC

Below is the normal procedure for Standby Letter of Credit (SBLC).

Step 1:
Application is made with AAJP GLOBAL SERVICES for opening of a SBLC including but not limited to the following:
1. SBLC application form. (Provided by AAJP GLOBAL SERVICES upon request)
2. Desired verbiage of SBLC. (If none provided, AAJP GLOBAL SERVICES will provide its normal SBLC / letter of credit verbiage.
3. SWIFT code and address of beneficiary bank.
4. Know Your Customer (KYC) documents including but not limited to: Passport copy of applicant, proof of address documents such as electricity or water bill, articles of incorporation of applicant company and brief summary, executive summary and/or business plan of underlying transaction.

Step 2:
1.AAJP GLOBAL SERVICES reviews all documents presented and evaluates acceptability of documents.
2.AAJP GLOBAL SERVICES then either approves application or denies and shall inform the applicant of such decision.

Step 3:
AAJP GLOBAL SERVICES prepares draft of the SBLC as it is comfortable to issue and forwards to client for approval.
All drafts shall be in line with rules and regulations governing the issuance of SBLC.

Step 4:
The client approves the draft and signs a contract agreeing to the terms and conditions of issuance and issuance charges as negotiated.

Other Application steps

There are other standard due diligence questions asked, as well as information requests regarding assets of the business and even possibly the owners. Upon receipt and review of the documentation, the bank will typically provide a letter to the business owner. Once the letter has been provided, a fee is then payable by the business owner for each yeah that the Standby Letter of Credit remains outstanding.

What are the fees for Standby Letters of Credit?

It is standard for a fee to be between 1-10% of the SBLC value. In the event that the business meets the contractual obligations prior to the due date, it is possible for an SBLC to be ended with no further charges.

What is the difference between SBLCs and LCs?

A Standby Letter of Credit is different from a Letter of Credit. An SBLC is paid when called on after conditions have not been fulfilled. However, a Letter of Credit is the guarantee of payment when certain specifications are met and documents received from the selling party.

Letters of credit promote trust in a transaction, due to the nature of international dealings, distance, knowledge of another party and legal differences.

How do SBLCs work in Cross-Border trade?

Where goods are sold to a counter-party in another country, they may have used an SBLC to ensure their seller will be paid. In the event that there is non-payment, the seller will present the SBLC to the buyer’s bank so that payment is received.

A performance SBLC makes sure that the criteria surrounding the trade such as suitability and quality of goods are met.

We sometimes see SBLCs in construction contracts as the build must fulfill many quality and time specifications. In the event that the contractor does not fulfill these specifications then there is no need to prove loss or have long protracted negotiations; the SBLC is provided to the bank and payment is then received.

MONETIZING SBLC/ BG

Attractive Salient Features:

• SBLC/BG FROM TOP RATED BANKS ONLY
• SBLC FROM 50M TO 10B
• BEST FOR PLATFORM TRADING
• SUITS PROJECT FINANCING
• MINIMUM RISK TO CLIENTS
• EXCELLENT LOAN TO VALUE
• NON-RECOURSE LOAN
• NOMINAL COMMISSIONS
• LITTLE PAPERWORK & QUICK DISBURSAL

SBLC Monetizing Simplified:

Monetizing a bank instrument (bg/sblc) means raising finance (or credit line) against it. In order to receive cash funds or raise a credit line against a bank instrument, it is important that the bank instrument is worded specifically for the purpose of receiving cash funds for either viable projects, Platform Trading or securing a credit line. Receiving cash funds or raising a credit line against a bank instrument issued for purposes other than these, may be difficult to monetize.

Monetizing bank instruments is the process of liquidating such instruments by converting them into legal tender. We can monetize or lend on credible bank instruments issued by rated banks to be used for project funding as well as move them into various trading platforms quickly and easily while creatively incorporating them into financing certain development projects. 

This process allows you to:

• Monetize instruments for cash as well as for raising a credit line
• Monetize instruments for buy/sell platform entry
• Monetize instruments for both cash and buy/sell platform entry

SBLC Monetization

We offer monetization/discounting of bank instruments such as: Cash-backed Standby Letter Of Credit/Bank Guarantee (BG/SBLC). Medium and Long Term Notes (MTN & LTN). Our monetization rate (LTV) is excellent, and our procedure is seamless, stress-free and quick.

• No upfront fees / charges required [ CONDITIONS APPLY]*****
• Clients must submit CIS/KYC in prescribed format only
• Accept delivery via Swift MT 760 only from Top rated banks
• 100% Successful Transaction Guaranteed
• AAA Rated Banks preferred.[Non rated Banks require Corresponding Banks]

PLEASE NOTE: Monetizer does not ask for any upfront charges/fee of any kind. You transmit your SBLC via SWIFT MT-760 and in return we monetize and transfer the monetized funds to you without delays.

LTV 70-85% depending on BANK Rating.
[Our Principal DOES NOT accept Leased Instruments.]

Procedures are simple:

• Compliance
• Clients deliver standard compliance
• Bank RWA letter
• KYC current
• Bank Officer Business Cards
• CONTRACT IS SIGNED within 24-48 hrs
• CLIENT SENDS CASH BACKED SBLC via SWIFT MT-760 to receiving bank coordinates provided by monetizer
• 3 TRANCHES are delivered to disburse the LTV FUND between 10-20 Banking Days.
• Instruments are returned 7 days prior to maturity or as agreed.
• RECEIVING BANKS:Platform uses Citi/JPM/BOA/Barclays/Deutsch Bank/HSBC
• Platform Principals Beneficiary Partner Accounts are under contract, allows CLs to be extended past $5B to $30B as required.

Highest Credit Rated SBLC Issuers:
Rank
1 – Singapore 88.6
2 – Norway 87.66
3 – Switzerland 87.64
4 – Denmark 85.67
5 ▲2 Sweden 85.59
6 ▼1 Luxembourg 83.85
7 ▼1 Netherlands 83.76
8 ▲4 Finland 83.1
9 – Canada 82.98
10 ▲1 Australia 82.18

CASH BACKED SBLCs from any of these countries, we can provide 100% LTV paid out in 3 tranches between 10-20 banking days from verification of SBLC via SWIFT MT-760.

Wonder how we do this ? 

It’s simple, we have credit lines activated by the A-AAA rated Issuing SBLC Bank via MT-760.

We can afford to negotiate with our Bank to provide a 3 Tranche disbursement of the 100% LTV within 10-20 Banking Days. It’s not the ability to provide the LTV, it’s the timeline we give to our bank to release the funding.

The longer we have to disburse the LTV, the more we can disburse to the client.

The reason why most platform can only issue a maximum of 95% on AAA rated Banks, is because they keep 5% for the Bank costs and for themselves.  If you don’t understand how credit lines work, then people will always believe what they’ve been told by third parties. It’s up to you how much you want to pay out on an incoming instrument assign for 366 days. 

 MONETIZATION OF BANK INSTRUMENTS

Understanding Monetization
Monetization is the process of converting or establishing something into legal tender. While it usually refers to the coining of currency or the printing of banknotes by central banks, it may also take the form of a promissory currency.

The term “monetization” may also be used informally to refer to exchanging possessions for cash or cash equivalents, including selling a security interest, charging fees for something that used to be free, or attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits. And data monetization refers to a spectrum of ways information assets can be converted into economic value.

Still another meaning of “monetization” denotes the process by which the U.S. Treasury accounts for the face value of outstanding coinage. This procedure can extend even to one-of-a-kind situations such as when the Treasury Department sold an extremely rare 1933 Double Eagle, the amount of $20 was added to the final sale price, reflecting the fact that the coin was considered to be issued into circulation as a result of the transaction.

Promissory currency

Such commodities as gold, diamonds and emeralds have generally been regarded by human populations as having intrinsic value within that population based on their rarity or quality and thus provide a premium not associated with fiat currency unless that currency is “promissory”. That is, the currency promises to deliver a given amount of a recognized commodity of a universally (globally) agreed-to rarity and value, providing the currency with the foundation of legitimacy or value. Though rarely the case with paper currency, even intrinsically relatively worthless items or commodities can be made into money, so long as they are difficult to make or acquire.

Debt monetization

• Money is already holds [e.g income or liquidations from a sovereign wealth fund]
• Issuing new bonds
• Or by the Central Bank
• Money it creates as new

In the latter case, the central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may “borrow” money without needing to repay it. This process of financing government spending is called “monetizing the debt.

In most high-income countries the government assigns exclusive power to issue its national currency to a central bank [citation needed], but central banks may be forbidden by law from purchasing debt directly from the government. For example, the Treaty on the Functioning of the European Union (article 123) forbids EU central banks’ direct purchase of debt of EU public bodies such as national governments. Their debt purchases have to be from the secondary markets. Monetizing debt is thus a two-step process where the government issues debt (Government bonds) to cover its spending and the central bank purchases the debt, holding it until it comes due, and leaving the system with an increased supply of money.

Our bank instruments, BG and SBLC/SLOC are issued from prime banks such as Barclays Bank London, Standard Chartered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP) as well as import and export transactions.