Standby Letter of Credit (SBLC) Monetization

14 Nov Standby Letter of Credit (SBLC) Monetization

What is Standby Letter of Credit (SBLC) Monetization?

Standby Letter of Credit (SBLC) Monetization is the process of converting a standby letter of credit (sblc) into money or legal tender. But the Standby Letter of Credit (SBLC) has to be cut or issued by a prime bank, this is very important because Standby Letters of Credit from unrated banks carry little or no value at all, so monetizing them is difficult.

How do you Monetize a Standby Letter of Credit (SBLC) or Bank Guarantee (BG)?

As already explained, bank instrument Monetization is the process of liquidating a Standby Letter of Credit (SBLC) or Bank Guarantee (BG) into cash or legal tender.

Grand City Investment Limited are sblc monetizers, and have developed relationships with some of the Top banks in the world to Monetize Standby Letters of Credit for clients worldwide. We can arrange and assist clients to monetize their Standby Letter of Credit from rated 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.

Our SBLC monetization rate is 80% LTV which is the best rate in the industry, and above all, all our sblc are issued by top AAA rated banks such as HSBC Hong Kong,  Citi Bank New York, Barclays Bank London, Credit Suisse etc. 

As the world’s number one Standby Letter of Credit monetization company, Grand City Investment Limited offers a very simple and straightforward Standby Letter of Credit Monetization settlement method using the Swift Network System..We use the SWIFT Network to have the Standby Letter of Credit (SBLC) delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760. 

What is a Standby Letter of Credit (SBLC)?

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

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.

Standby Letter of Credit (SBLC) Monetization Terms

• To monetize a Standby Letter of Credit (SBLC), you must be in possession of the SBLC, and it must be verified before monetizing.
• the Standby Letter of Credit (SBLC) to be monetized must be issued by any of the top 25 AAA rated banks in USA, Switzerland, Germany, London or France such as JP Morgan, HSBC, Citibank, Barclays, Stanchart etc.
• Standby Letter of Credit (SBLC) from unrated banks cannot be monetized.
• The Standby Letter of Credit (SBLC) face value should be over 5 Million Dollars
• The Standby Letter of Credit (SBLC) MUST have at least 11 months validity prior to expiry
• We prefer monetization transactions of $10 million or more, but we will accept transactions as low as $5 million transaction amount
• Transaction turnaround time between 5 to 10 working days or less
• Exceptions can be made to minimum transaction
• Brokers and intermediaries must have a legally binding agreement.

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Standby Letter of Credit (SBLC) Monetization Process using the swift system. 

1. After execution of the SBLC Monetization contract by both parties, the Client will instruct his bank to send SBLCSWIFT MT799 to the bank coordinates provided by the Monetizer.
2. The Monetizers bank on receipt of the SWIFT MT799 from the client’s bank will reply with a SWIFT MT799.
3. On receipt of the Monetizers bank SWIFT MT799 the Clients bank will deliver the SBLC by SWIFT MT760 to the Monetizers bank.
4. Upon receipt, confirmation and delivery of the SWIFT MT760 the Standby Letter of Credit Monetizer will within maximum four (4) banking days grant a Non Recourse Loan for the LTV as agreed from its nominated bank to the Client.
5. The SBLC Monetizer agrees to return the SBLC unencumbered fifteen (15) calendar days before the 1 year anniversary of the signed contract between the parties.

SBLC Monetization Process using  Euroclear:

1. After execution of the SBLC Monetization contract by both parties, the Client will instruct his bank to assign the SBLC using FREE Euroclear Delivery to the bank coordinates provided by the SBLC Monetizer.
2. The Clients Banker shall immediately email a certified Euroclear execution receipt of the SBLC delivery to the SBLC Monetizer.
3. Upon receipt and confirmation of the Euroclear assignment and delivery, the SBLC Monetizer will within maximum three (3) banking days grant a Non Recourse Loan for the LTV as agreed from its nominated bank to the Client.
4. The Standby Letter of Credit (SBLC) Monetizer agrees to return the Standby Letter of Credit (SBLC) unencumbered fifteen (15) calendar days before the 1 year anniversary of the signed contract between the parties.