Trade & Finance

Trade Finance Leverage

Letters of Credit • Bank Guarantees • Performance Bonds

Our clients are importers and trading companies that utilize our services to expand their business by leveraging their existing cash-flow.

Payment Guarantees

We negotiate on your behalf with experienced trade finance partners payment instructions that meet your import contract requirements. 

Whether you are the end buyer, or brokering between the buyer and seller, Balboa will enable you to leverage payment guarantees that ensure your suppliers can work with you.

 
Financial Bank Instrument Types and Uses
Standby Letter of Credit (SBLC) and Bank Guarantees : Ideal for most import transactions. Also allows for a usance payment, or deferred payment, after taking possession of the product.

Monetizing SBLC and BG : Standby LC and BG instruments can also be leveraged with the right monetization party to generate unencumbered non-recourse funding.


The funding amounts are based on the rating of the financial asset which apply to the Face Value (FV) as a percentage.


Percentage amounts range anywhere from 10%, on the low side for non-rated bank and financial institutions, and up to 80% of FV for top tier credit rated bank institutions.

Documentary Letter of Credit: Standby LC and BG instruments can also be leveraged with the right monetization party to generate unencumbered non-recourse funding. The funding amounts are based on the rating of the financial asset which apply to the Face Value (FV) as a percentage. 


Percentage amounts range anywhere from 10%, on the low side for non-rated bank and financial institutions, and up to 80% of FV for top tier credit rated bank institutions.

Discounting Letters of Credit: Import letters of credit are considered higher risk and often only offered to clients with seasoned import history. Discounting is based on financing terms common to lending where repayment of principle plus interest is required prior to the LC expiring.


Discounting an import LC is usually structured as a short-term loan that finances against the collection value of the LC (example: 90 to 120 days is common). Loan-To-Value (LTV) of the LC is usually around 60-80% LTV.

Performance Bonds: Often a 3-5% performance bond is required with import contracts in addition to other payment guarantees or payment instructions that protects the seller or buyer from non-performance of the contract.

Offshore Payments

Some importers or exporters are in countries where it’s difficult to send or receive payments offshore. Balboa has strategic partners that can enable you to receive payments, letters of credit from your buyers, re-issue letters of credit to your sellers, and disburse payments to interested parties.

© 2022 Balboa Trade & Shipping

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