Bank guarantee bg – bank instrument providers letters of credit n gas in paris lyrics


Project owners can apply for lines of credit with their own bank to support the financing of their project. Normally the credit line needs to have some collateral backing it, which is where a bank guarantee letter (BG) can come into play. There are options for project owners to either lease or buy a bank instrument. A bank guarantee such as an SBLC is backed by collateral for one year and one day. The corporation who provides the collateral then becomes the ‘Provider’ of the SBLC. You can use the leased SBLC for 366 days (one year and one day) and then decide whether or not you want to renew the lease? Renewals are not a given and are offered on a case by case basis. If the bank guarantee isn’t renewed, then it has be returned unencumbered and free of any liens.

When leasing or purchasing an SBLC from a bank instrument provider, there will always be a fee involved. The difference between the purchased and leased amount can be a substantial amount of money. However if using a Closed End Transaction (for project funding,) the fee can be taken care of within the transaction itself. Open V’s Closed End Transactions

Trying to source providers can be VERY risky, it can also be a waste of time and be an expensive way to do business. You have to be incredibly diligent and very careful in who you deal with in this area of finance using Bank Guarantees. The internet is fraught with those who proclaim that they obtain BG’s whereas more often than not they are only seeking fees (especially if there are intermediaries involved.)

The same can hold true when looking for SBLC monetizers and traders. This is why it is important that you find a ‘closed ended transaction’ whereby all service providers are already in agreement with each as opposed to trying to source each service provider individually (open ended) whereby one party may not recognize the other. All of a sudden you have a bank instrument with no-one to go to to monetize and/or trade it, leaving yourself a hefty bill.

Another casing point. Monetizers block the bank instruments when they go into trade. You can not physically pass on a leased instrument to trade with. The trader will not trade a bank instrument if they have not agreed to do so with the monetizer.

By using our service we cover all aspects. Our team of lawyers, international bank guarantee providers, monetizes and traders all work in tandem with each other for the purpose of funding projects. Each part of the transaction process work as a whole by having pre-arranged agreements with one another. This is what is called a Closed End Transaction. This means that by having pre arranged agreements with Providers, Monetizers and Traders will help towards minimizing risk during any part of the financial transaction.

We take it a step further whereby our representative law firm has been approved by our provider to accept fees from clients which enter into a client account thus providing an extra layer of security and added comfort in the process. Once the fees have been received, they will then inform the provider who will then begin the process of issuing the SBLC. The fees are not handed to the provider until a pre-advice MT799 has been delivered by SWIFT.

We have streamlined the process including the design of the application forms and have set up an agreement with solicitor/lawyer to work on the client’s behalf. There’s always some kind of paper trail and receivers will get a hard copy of the letter of credit.