Case Study: Back-to-Back SBLC for a Sulfur Supply Trade
Case Study: Back-to-Back SBLC for a Sulfur Supply Trade
A trader based in Dubai secured a contract to lift sulfur from a refinery. The refinery demanded an $18M Standby Letter of Credit (SBLC) as payment security. The trader lacked sufficient credit lines to issue directly, and full prepayment was not feasible. Financely structured a back-to-back SBLC arrangement to unlock the shipment and protect both sides.
The Challenge
The refinery required a top-tier SBLC, but the trader’s local bank could not meet this standard. Without a back-to-back arrangement, the transaction risked collapse despite a ready buyer for the offtake.
Our Role
Financely arranged for the domestic issuing bank to provide the first instrument and sourced a European confirming bank acceptable to the refinery. This mirror structure delivered the required payment assurance while minimizing balance sheet impact for the trader.
Solution Delivered
- Issuing Bank: Domestic commercial bank supporting the trader.
- Confirming Bank: European institution with refinery acceptance.
- Structure: Back-to-back SBLC, 90-day tenor, mirror terms.
- Collateral: Partial cash margin and receivable assignment from the downstream offtaker.
- Compliance: Structured under ISP98 with refinery-approved terms.
Results
The structure was executed within 14 business days. The refinery received acceptable payment security, the cargo was shipped on schedule, and the trader completed delivery to its buyer without straining liquidity.
This case study is for informational purposes only and does not constitute legal, banking, or investment advice. Each transaction is subject to independent credit approval, compliance checks, and final documentation. Financely does not guarantee funding outcomes and operates strictly on a best-efforts advisory basis.
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