Stand By Letters of Credit (SBLC’s) - Cash them in for real dollars.
Note: This also applies to Letter of Credit (LC); Irrevocable Letter of Credit (ILC); and Pay Orders

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.