Letters of Credit in Trade Finance

Letters of Credit in Trade Finance

In this video Andy describes letters of credit - what they are, their functions and the different format types.
Overview

Letters of Credit are a bank instrument for facilitating trade. It alleviates the risk of the purchaser defaulting on their payment by transferring the risk onto the issuing bank. It ensures that the bank is now responsible for paying the seller, assuming all conditions are met.

Key learning objectives:

  • Define Letters of Credit

  • Explain the process of using Letters of Credit to remove the credit risk of the purchaser

  • Outline the different specifications featured in Letters of Credit

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Summary
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Expert
Andy Sweeney

Andy Sweeney

Andy began his career at Citigroup Global Markets as a money market trader. He then joined RBC Capital Markets and subsequently Mizuho working in bond syndication. After leaving banking, Andy joined a trade finance team to advise on structuring a bond. Since then, Andy has joined Blackstar, where he advises corporates on structuring trade finance.

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