Letter of Credit Non-bank Issuer

Abstract

Letters of credit are used where there is a lack of trust between the seller and the buyer. A disadvantage to the applicant is that the issuance of a letter of credit by their bank will require a credit facility.

When the buyer wishes to avoid the requirement or utilisation of their credit facility, they may consider issuing their own documentary credit or having this issued by a non-bank third party. An example of a non-bank issued credit is reviewed, the risks to the beneficiary examined and their request for negotiation finance considered.