Stand By Letters of Credit (SBLC’s)

Value
conversion depends on many factors, some fixed, some floating such as:

• Type of Letter of Credit varies and includes
  (SBLC, ILC, LC, Pay Order, etc.)


• It is Usually viewed as a SBLC is the
  Better Bank Instrument


• SBLCs are issued on a Bank-to-Bank Basis
  only


• The Issuing Bank Rating as well as location
  (branch) of Bank


• Who is issuing the instrument - individual,
  company, government, etc.


• Instrument Must Be in US Dollars only


• Bank Policy


• Market Conditions


• Client Anticipation of Return


• Place Transaction Occurs
  
  

What is done with ‘Cash’ after conversion
- this is becoming a paramount issue with banks converting the instrument,
the preferred and acceptable method is to deposit a portion of the redeemed
funds with the honoring bank, usually not less than 20% for a period of
not less than six (6) months.

Hints   

• These types of Bank Instruments can be
  issued to individuals, corporations, trust, pension funds, endowments,
  non profit organizations, or to any payable entity.


• Individuals who hold such an instrument
  may have problems with 3rd party transactions or banks.


• LC, ILC, or SBLC are often times issued
  for the sale and purchase of tangible assets.


• It is often easier to raise a 'Credit
  Line' than convert the instrument to CASH!


• Fluctuating World Market Conditions set
  the pace and determine the trading value, if any.


• Usually most every instrument can be converted,
  however, some are just Not desirable Trading Instruments on the current
  World Market.


• Certain Required "Documentation'
  is needed for this type of transaction.