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SBLC / BG (Trade Financing)- Global Oil and Gas Trading

TRADE FINANCE : PROVIDING SBLC / BG FOR OIL & GAS TRADE

NO UPFRONT FEE IS REQUIRED

Buying or Leasing SBLC : ​If you are looking for genuine/reliable Provider to buy or lease a Standby Letter Of Credit (SBLC) or a Bank Guarantee (BG), you have arrived at your final destination. We are experts at handling issuance of SBLC/BG and we have done it many times over. Corporations, Airline Operators, Investment Bankers, Energy Companies, Project Owners, Miners, Oil & Gas Traders, Commodity Traders, etc. have successfully obtained SBLCs/BGs through us. We firmly believe that all our clients must receive correct and full information about SBLC or BG prior applying for these instruments. If you follow our procedure, it is likely that you might obtain an SBLC provided you are financially capable to transact and possess the right business credentials. We generally do not accept applications from brokers or intermediaries. The applicants first need to engage us as their sole and exclusive SBLC FACILITATOR for obtaining SBLC through us. Before proceeding, we strongly recommend one reads through the information below: 


WHAT IS AN SBLC ?

A standby letter of credit (SBLC) is a guarantee of payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions and are proof of a buyer's credit quality and repayment abilities. The bank issuing the SBLC performs brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then sends notification to the bank of the party requesting the letter of credit (typically a seller or creditor).

A standby letter of credit shows a company’s credit quality and ability to repay loans. Although a SBLC is not intended for use, it helps fulfill business obligations in case the business stops operations, cannot pay its vendors or becomes insolvent.

Small businesses often face difficulty when securing financing. For this reason, standby letters of credit may be especially beneficial for encouraging investors to lend money to a company. In case of default, investors are assured they will be paid principal and interest from the bank through which the SBLC is secured.

Standby Letters of Credit are issued for use in a wide variety of commercial and financial operations. Standby letters of credit are very much alike documentary letters of credit, their main difference is that unlike DLC’s, they only become operative in case the applicant defaults, then the beneficiary in whose favor the SBLC was issued, can draw on the SBLC and demand payment.

Historically, Standby letters of credit were developed because the US regulator legally limited US bank’s authority to issue guarantees.

SBLC’s are very similar to demand guarantees, which also require that the presentation of stipulated documents be compliant with the terms and conditions of the guarantee. SBLC’s and guarantees are different in terms of protection, they both serve the primary purpose of making sure that sellers get paid, but while a standby letter of credit protects the seller, a bank guarantee protects both sides, since it also protects the buyer in case the supplier never ships the goods or ships them in a damaged condition.

When requesting a SBLC, a business owner proves to the bank he is capable of repaying the loan. Collateral may be required to protect the bank in case of default. The bank typically provides a letter to the business owner within one week of receiving documentation. The business owner must pay a SBLC fee for each year that the letter is valid. The fee is typically 1-10% of the SBLC value. If the business owner meets the criteria outlined in the contract before the due date, the business owner can cancel the SBLC without further charges.

Standby Letters of Credit (SBLC) are a very flexible tool, making them a suitable product for securing a wide range of payment scenarios. A financial SBLC, the most common type, is typically used in international trade or other high-value purchase contracts where litigation or other non-payment actions may not be feasible. A financial SBLC guarantees payment to the beneficiary if criteria outlined in the contract are left unfulfilled. For example, an exporter sells goods to an overseas buyer who guarantees payment in 30 days. When the payment does not appear by the deadline, the exporter presents the SBLC to the importer’s bank and receives the payment.

A performance SBLC ensures the time, cost, amount, quality of work and other criteria are fulfilled in a manner acceptable to the client. The bank pays the beneficiary if any of the written obligations are unmet. For example, a contractor guarantees a construction project will be finished in 90 days. If work remains incomplete after the 90-day period, the client can present the SBLC to the contractor’s bank and receive the payment due.


HOW DOES SBLC WORK?


 A breakdown of SBLC types is provided below:

1. A performance standby – backs a commitment to perform other than to pay money/funds and includes an obligation to pay for loses occurring from a default of the buyer in the process of completing an underlying transaction.
2. An advance-payment standby – supports an obligation to account for an advance payment made by the supplier to the buyer.
3. A bid-bond or tender-bond standby – backs an obligation of the buyer to execute a contract if the buyer is awarded a bid.
4. A counter standby – backs the issuance of another, separate standby letter of credit or other undertaking by the supplier of the counter standby.
5. A financial standby – supports an obligation to pay funds, including any instrument evidencing an obligation to repay borrowed money.
6. An insurance standby – supports an insurance obligation of the applicant.
7. A commercial standby – backs the commitment of a buyer to pay for goods or services in the event of non-payment by other methods.
8. A direct-pay standby – intended to be the primary method of payment. It may or may not be linked to a default in performance or payment.


 

BUYING A BG/SBLC 


A Bank Guarantee (BG) is the name used mostly in Europe and Standby Letter of Credit (SBLC) is exactly the same, but used in the USA. Since we are working globally you will see the expression BG/SBLC in our documents.

Our Purchased Bank Guarantees –  Owned, are issued by World's Top 25 Banks. We use the Bank SWIFT Network to have clients' Owned Bank Guarantees (BG) delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760. We operate a reliable, efficient delivery and authentication process.


 

BANK INSTRUMENT PARTICULARS


Instruments: BG/SBLC, ICC 758/600 FORMAT, CASH BACKED, ICC600.758 BG

Age: Fresh Cut

Interest Rate: Zero Coupon

Term: One (1) years and One (1) day

Currency: United States Dollars (US$)/ Euro

Issuing Bank: Top 25 rated Europen Banks

Contract Amount: US$ XXX,000,000.00 (XXX Million United States Dollars/Euro)

Invoice Price: XXXXXX Percent (XX%) of Face Value payable by Buyer

Intermediary Fees: Two Percent (2%) of Face Value payable by Buyer

First Tranche: US$/Euro XX,000,000.00 (XXXX Million United States Dollars/Euro)

Subsequent tranches: As per agreed tranche schedule 

Delivery: Buyer’s Bank sends SWIFT MT799 BPU

Issuing Bank sends PRE-ADVICE SWIFT MT-799

Issuing Bank sends instrument via SWIFT MT-760.

Hard copy of Instrument will be delivered to Buyer’s Bank via Bank Bonded  courier within 7 banking days after receipt and authentication of payment.

Payment:  Within 5 banking days after receipt and authentication of SWIFT MT-760,  Buyer’s Bank will release payment to Seller’s Bank via SWIFT MT-103 in  accordance with terms and conditions in Buyer’s SWIFT MT799 BPU.


 SBLC TRANSACTION PROCEDURE 


​​Instrument & Service Description


A Bank Guarantee (BG) is the name used mostly in Europe and Standby Letter of Credit (SBLC) is exactly the same, but used in the USA. Since we are working globally you will see the expression BG/SBLC in our documents.

Our Purchased as well as leased BG/SBLCs  are issued by World's rated Top 25 Banks. We use the Bank SWIFT Network to have clients' BG/ SBLC delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760. We operate an extremely reliable, efficient delivery and authentication process.

STEP BY STEP PROCEDURE FOR OBTAINING BG/ SBLC

1. Beneficiary submits signed official Letter Of Interest (LOI) for applying for SBLC/BG together with compliance documents:
1.1   Client Information Sheet (CIS)
1.2   Statement of Non-Solicitation of Funds
1.3 Irrevocable Fee Protection Agreement covering all identified beneficiaries/ intermediaries from both sides
1.4   Clear color copy of the beneficiary’s/Signatory’s passport
1.5   Certificate of Incorporation of beneficiary’s company
1.6  Proof of fund (POF): There must be availability of cash funds (not credit line) in the beneficiary's bank account sufficient to cover at least the price of the first tranche of the instrument. This can be in the form of a Bank Comfort Letter (BCL) or RWA (ready, willing, and able) letter issued by the beneficiary's bank and signed by at least two bank officers, or a screen shot of the account statement no older than three days from the date of filling the CIS. 
2. After thorough and extensive due-diligence of the applicant/beneficiary and subsequent approval by the Provider, applicant/beneficiary will receive the Deed Of Agreement (DOA) Format which spells out Terms and Conditions of the Contract, approved contract amount (Face Value), Individual tranche size and schedule, Price, etc.  
3. The applicant/beneficiary completes the Deed of Agreement (DOA):  
a. Accepting the SBLC price.
b. Confirming applicant’s/beneficiary’s bank will accept the Provider’s Corporate Invoice
c. Confirming acceptance of SWIFT MT799 BPU verbiage.
d. Confirming the Intermediary Fee Protection Agreement
e. Confirming the acceptance of the SWIFT MT760 (SBLC) verbiage
The filled & signed DOA must be returned on beneficiary’s letterhead & sent to Subcontract India via e-mail duly signed in blue ink and stamped on each page
4. After internal scrutiny and evaluation of the filled DOA received from the applicant/ beneficiary, the Provider might undertake another due-diligence of the applicant/beneficiary. Once satisfied, the Deed Of Agreement (DOA) would be countersigned by the Provider after filling in all the relevant information relating to the Provider and his Bank, and returned to either the applicant/beneficiary for lodging it in his bank or to the applicant’s/beneficiary’s bank directly  
5. The fully executed Deed Of Agreement (now lodged with Provider’s and Beneficiary’s respective banks) becomes the legally binding contract between the two parties.
6. The Provider  will issue a Corporate Invoice to the Beneficiary’s bank showing the all-inclusive amount of the SBLC/BG price and commissions to be paid after the SBLC/BG has been delivered via SWIFT MT760.
7. The beneficiary’s bank will send a written confirmation via SWIFT MT799 to the Provider’s bank stating that “it is RWA (ready, willing and able) to receive the SBLC/BG as per the Deed Of Agreement.  
8. Provider’s Bank will acknowledge the receipt of the SWIFT MT799 RWA send a counter MT799 RWA to the Beneficiary’s bank confirming it is ready, willing and able to send the SBLC/BG Pre-Advice via SWIFT MT799 to the Beneficiary’s Bank.
9. Within three (3) banking days, the Provider’s bank will issue the SWIFT MT799 Pre-Advice confirming that the instrument will be delivered against the issuance of SWIFT MT799 BPU (bank payment undertaking) by the beneficiary's bank.
10. Beneficiary’s Bank will send the SWIFT MT799 BPU (Bank Payment Undertaking earlier used to be called ICBPO) as per the verbiage earlier provided in the DOA to guarantee payment for the Corporate Invoice after delivery of the SBLC/BG to beneficiary’s bank (Note: ICBPO is now banned)
11. Within five (5) banking days after Provider’s bank receives and authenticates the SWIFT MT799 BPU, the Provider’s bank will deliver  the SBLC/BG via SWIFT MT760 and also provide the copy of the SWIFT message via bank e-mail.
12. Within Five (5) banking days after the SBLC/BG is delivered and received by Beneficiary’s bank via SWIFT MT760 and is authenticated, the beneficiary’s bank will activate the Bank Payment Undertaking and pay the Provider via SWIFT MT103. The hard copy of the SBLC/BG to be delivered via bank bonded courier  to  the  beneficiary’s bank within  seven  (7)  days  after  the  payment  being  received  by  principal’s bank.
13. The beneficiary pays xxxxxxx percent all inclusive (xx% + 2%) of face value of each tranche, as per the relevant irrevocable fee protection agreement .
14. All subsequent tranches will be based on the same procedure, until the agreed amount of the contract with Provider reaches completion or the collateral or funds become exhausted.
15. Any unauthorized bank calls without prior agreement between parties, probes or communications, or an improper solicitation or disclosure involving any of the banks concerned in this transaction will result in immediate cancellation of this transaction and subject the violating party to damages.​​​


SANCTIONS FOR NON-PERFORMANCE 

After this contract is signed by both Seller and Buyer, and copies exchanged electronically or otherwise by a delivery service, failure to follow the closing procedure in time and form herein is considered breach of this contract and puts the failing party in default position to pay a onetime penalty fee of 1% of the first tranche of the contract to the suffering Party. 

WE TAKE CARE OF YOUR TRADE FINANCING REQUIREMENTS

Oil & gas traders can approach us with their requirements of trade financing and our expert team will gladly extend this service. Our procedure is simple yet transparent and our cost is extremely competitive. Traders can depend on our expert team to provide the most professional financial services.