Case Study: Irrevocable Documentary LC for a Steel Importer
Case Study: Irrevocable Documentary LC for a Steel Importer
A trading company required $15.6M of imported steel products. The overseas supplier insisted on full payment security, but the buyer’s domestic bank lacked the international reach to provide a letter of credit acceptable to the seller. Financely was engaged to structure and arrange an Irrevocable Documentary LC at Sight under UCP600 that met compliance requirements and enabled the cargo to move.
The Challenge
The supplier required a bank-confirmed LC before shipment. The importer’s existing bank was not recognized by the supplier’s compliance team, and prepayment was not viable given liquidity needs. Without a workable LC, the shipment would have been cancelled and contractual obligations downstream jeopardized.
Our Role
Financely prepared a credit file, presented collateral and receivable flows to issuing banks, and sourced a confirming bank with the necessary reputation in steel trade. We ensured all terms were aligned with UCP600 to prevent disputes at document presentation.
Solution Delivered
- Issuing Bank: Domestic commercial bank with client relationship.
- Confirming Bank: European bank with compliance acceptance by the supplier.
- LC Terms: Irrevocable, payable at sight, governed by UCP600.
- Collateral: 20% cash margin + receivable assignments from domestic buyers.
- Documentary Flow: Bill of Lading, SGS inspection, commercial invoice, and insurance documents required for drawdown.
Results
The LC was issued and confirmed within 10 business days. The shipment proceeded on schedule, the importer avoided prepayment strain, and the supplier received full payment assurance. Both banks managed risk effectively with the agreed collateral package.
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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