Case Study — Structured Commodity Finance for Solar Module Import
A Belgian renewable energy distributor secured a major contract requiring the import of high-efficiency solar modules from a Chinese manufacturer. While the distributor had a strong track record, their working capital could not cover the immediate value of the shipment. We structured a back-to-back Letter of Credit (LC) facility, issuing a second LC in favor of the Chinese manufacturer, unlocking the deal without the sponsor tying up additional equity.
2nd LC
Issued to Chinese Manufacturer
10 Weeks
Cycle Time (Order to Delivery)
The Challenge
The Belgian distributor had secured a large downstream contract but lacked the working capital to pay the Chinese manufacturer upfront. Their bank issued a first LC to Financely’s forward-flow partner, but the supplier required direct payment security. Without an additional LC confirmed in China, the shipment risked delay and potential contract penalties for the sponsor.
Our Solution
We structured a back-to-back Letter of Credit arrangement. Leveraging our forward-flow trade finance agreements, we caused a second LC to be issued directly in favor of the Chinese solar manufacturer, secured by the first LC and the Belgian sponsor’s receivables from their offtaker contract.
This mechanism provided dual comfort: the manufacturer received a bank-confirmed LC guaranteeing payment upon shipment documents, while the Belgian distributor preserved liquidity and avoided posting cash collateral. We also ensured the transaction included shipment insurance and performance safeguards
to protect both ends of the supply chain.
The Outcome
The transaction successfully financed a $9.5M shipment of solar modules. The Belgian importer fulfilled their contract obligations, while the Chinese manufacturer received secure payment terms. Cycle time from order to delivery was ten weeks, with financing repaid upon downstream receivables collection.
This structured commodity finance solution highlights how Letters of Credit can be layered to create security for both buyer and seller. The Belgian sponsor avoided tying up working capital, while the Chinese manufacturer received reliable settlement, enabling continued supply under long-term terms.
Key Takeaways
- Back-to-back LC structures unlock trade where sponsors lack upfront liquidity.
- Suppliers gain bank-confirmed payment security, mitigating counterparty risk.
- Importers preserve working capital while meeting contractual obligations.
- Forward-flow agreements ensure speed and reliability without deal-by-deal “lender fishing.”
Explore Structured Commodity Finance
We arrange trade finance solutions across energy, metals, and renewables. Our forward-flow agreements enable timely issuance of Letters of Credit, SBLCs, and prepayment facilities. Minimum engagement fee: $25,000.
Request a Proposal
Financely is a financial advisory and placement firm. We are not a direct lender. All financings are subject to due diligence, compliance, and executed documentation. Engagement fees for structured commodity finance mandates start at $25,000. Terms vary depending on jurisdiction, counterparty profile, and commodity type.