01. The transaction being sought
The requesting party sought an SBLC lease to obtain financing through monetisation or discounting and pay the provider 20 days after receiving it, using the financing proceeds. The prices communicated were also unacceptable to the requesting party; the review does not establish an alternative market rate.
The procedure did include a BG/SBLC alternative within a general bond and MTN offering. The question was whether its conditions supported this particular transaction. No prior written agreement establishing acceptance of the requested structure was available.
[D1 · p. 4]02. Three different timing references
| Issue | Requested | Received |
|---|---|---|
| Starting point | Receipt of the SBLC | Reservation or call option date |
| Payment period | 20 days after receiving the instrument | 20 calendar days from the call option to arrange or pay the fees |
| Conditional payment | Allow the period following receipt | Release within eight hours of receipt, verification and acceptance |
The two 20-day periods do not start at the same time. Reservation may precede delivery, so the procedure could require commitments before receipt of the SBLC. Release within eight hours also failed to provide the requested period to obtain financing.
The document additionally offered a bank-backed promissory note maturing in 180–270 days, subject to negotiation and approval. This alternative does not automatically reproduce payment after 20 days or confirm acceptance of the intended funding source.
[D1 · pp. 7–10]03. The payment source matters too
Clause 12 rejects payments from expected future profits through trading, platforms or loans. The intention to pay with the proceeds of financing the SBLC required express acceptance replacing the incompatible condition.
It also remained necessary to specify whether the requested 20 days were calendar or banking days and how receipt would be evidenced. The deadline should not be left open to different interpretations after an obligation is assumed.
[D1 · p. 7, cl. 12]04. Review costs without counting them twice
The stated 12% applied to instruments with a face value below ten million. For other amounts, the procedure referred to price lists: it was not a universal rate for every SBLC.
- Reservation
- EUR 25,000–37,500, depending on the band.
- Pre-advice and extensions
- EUR 35,000 for the optional email; EUR 15,000 per 30-day extension, with a maximum of three.
- Other items
- A 2% intermediary commission under the document and an optional performance bond at 2.5% of face value annually.
The document's boxed notices allow reservation, pre-advice and extension payments to be refunded after successful completion or deducted from the fees. Adding them again as final costs would double-count amounts if offset. They remain advances: recovery if the transaction fails needs clarification. The document describes the performance bond as covering failure to return the instrument; it does not establish protection for these advances against non-delivery.
[D1 · pp. 5–8]05. The wording must support the intended use
Clause 14 postpones direct communication between the banks until the bond or MTN is purchased. The review recommended prior validation of the issuer, draft and structure with the entity that would provide financing.
The SBLC template promises payment without further proof or condition, then requires “APPLICANTS CONFIRMATION OF DEFAULT”: confirmation of default by the applicant itself. That contradiction needs to be resolved and the wording submitted to the financier.
[D1 · pp. 8, 18]SWIFT describes MT760 for guarantees and SBLCs; mentioning that message does not establish approved financing. The draft also combines “ICC 600 URDG 758”. Official references distinguish UCP 600, ISP98 and URDG 758: the contract must define its applicable rules precisely. [S1] [S2] [S3]
06. Request a transaction-specific proposal
What should be avoided is committing to payments under a procedure that contradicts the requested transaction. The recommendation was not to treat it as accepted and to request a corrected proposal containing:
- Identified provider and issuer; face value, currency, validity and the full SBLC draft.
- A revised quotation, itemised charges, payees and payment dates.
- Payment 20 days after a defined receipt event and acceptance of the financing proceeds as the payment source.
- Replacement of incompatible conditions and treatment of rejection, discrepancies and delayed or unavailable financing.
The conclusion concerned commercial and documentary incompatibility. A revised proposal and the financier's acceptance remained outstanding requirements, not outcomes already achieved.
Scope and limitations
An anonymised real case, published with the requesting party's authorisation. The review covered the procedure received and the stated commercial requirements; it does not establish actual delivery, approved financing, financial loss or proven fraud. Nor does it certify the provider's solvency or future monetisation of an SBLC. Party identities and contact details are omitted.
Sources and traceability
Document references use the original's printed numbering; it contains 17 physical pages. The public report records the observations and sources. Document review: 27 October 2026.
- D1. Procedure received: product, p. 4; pricing and advances, pp. 5–8; clause 12, p. 7; clauses 13–14, p. 8; summary, p. 10; SBLC draft, p. 18. Report in Spanish · Informe en español (PDF)
- S1. SWIFT · Category 7: Documentary Credits and Guarantees / Standby Letters of Credit, MT760 scope, p. 66.
- S2. ICC Academy · An overview of UCP 600 and ISP98.
- S3. ICC Academy · Uniform Rules for Demand Guarantees, URDG 758.