Letter of Credit

Letter of Credit Credit Enhancement

Letter of Credit Overview

Financial Institutions:

  • International Banks: United States
  • Offshore Banks: Europe, Middle East, China, Singapore, Hong Kong, Costa Rica
  • Offshore Trusts: Panama, Switzerland, Belize

Financial Asset Type:

Letter of Credit

Delivery Method:

About Letter of Credit

A Documentary Letter of Credit (LC) is a bank instrument issued from an applicant’s bank on behalf of a beneficiary to aid in mitigating risk and creating a layer of protection against non payment. Similar to a bank guarantee it aids the beneficiary to have confidence a rated financial institution will ensure payment for service rendered once all terms and conditions contractually are met. However, unlike a bank guarantee, the LC, as in the case with a standby letter, the instrument is required as the mechanism by which payment is made; whereas bank guarantees are usually only drafted against or called in the event of default.

Because a Letter of Credit is a negotiable debt instruments, meaning the bond or debt may be passed onto another party for collection, the value may also be monetized like the value of a top bank rated and issued bond. This gives the ability to use a LC not only for their primary use as methods of payment, but they can also be valued and pledged in terms of loans and debt.

This gives rise to an avenue for creating trade finance and project finance through a Letter of Credit and other bank instruments.

Balboa Trade provides financial solutions for parties seeking to get access to bank instruments for various types of transactions including trade finance, international trade, project finance, and for traditional credit enhancement. Where many parties loose out on being able to complete high end transactions and project funding due to credit worthiness issues, Balboa Trade’s financial service providers have the ability to credit enhance your position with top rated bank instruments.

Proceed to Proof of Funds Procedures

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