Large commodity trades rarely close on goodwill alone. Sellers insist on watertight evidence of funds; buyers need to conserve cash for multiple cargoes. A proven solution is a three-step chain— MT 799 Proof-of-Funds (POF) → 30-120-day Bridge Loan → Transferable Letter of Credit. This article digs into every phase: message wording, compliance checks, loan structuring, LC mechanics, cost stack, timetable, and failure traps. Sponsors moving USD 20–250 million cargoes will walk away with an actionable blueprint.
| Gap | Problem Created | Bridge-Chain Fix |
|---|---|---|
| Seller confidence | Allocation held until funds verified | MT 799 proves cash within 24–48 h |
| Bank processing | Buyer’s LC can take 10–15 working days to issue | Bridge loan covers cargo cost during LC drafting |
| Cash utilisation | Locking 100 % cash in LC hurts trading velocity | Bridge lends 80-90 %, LC repays loan on arrival |
MT 799 is a free-format Swift message used for authenticated bank-to-bank correspondence. Unlike emails or “bank letters” on letterhead it passes through the Swift network, giving counterparties comfort that:
| Field | Why It Matters |
|---|---|
| Account Holder (exact legal name) | AML / KYC match |
| Amount & Currency (figures & words) | Avoids misinterpretation |
| Value Date & Expiry | Defines reservation window |
| Purpose Reference | Ties funds to specific SPA |
| Free-of-Lien Statement | Shows funds are unencumbered |
MT 760 creates a binding guarantee—good for final deal, expensive upfront. MT 199 is informal and often rejected. MT 799 sits in the middle: low fee, verifiable, widely accepted for soft allocation.
| Cargo Type | Advance % | Margin (SOFR +) |
Up-front Fee |
|---|---|---|---|
| Crude oil | 85 % | 275–325 bps | 1.0 % |
| Refined products | 80-88 % | 300–350 bps | 1.0-1.2 % |
| Grains & sugar | 85-90 % | 300–375 bps | 1.2 % |
| Metric | Threshold | Test Frequency |
|---|---|---|
| Borrowing Base | >= 100 % | Weekly |
| Single Cargo Exposure | < 30 % of facility | Per draw |
| Liquidity Floor | > USD 5 m or 10 % of debt | Monthly |
A transferable LC lets a trader pay the upstream seller and then assign the same LC rights to a downstream buyer, saving issuance fees and reducing documentary risk.
| Day | Step | Primary Document |
|---|---|---|
| 0-2 | MT 799 issued & verified | Swift copy + bank call-back |
| 2-7 | Bridge loan signed & funded | Facility agreement + security docs |
| 8-18 | Buyer LC processed | LC draft & compliance approvals |
| 18-25 | Transferable LC issued & assigned | UCP 600 LC + assignment notice |
| 25-65 | Seller draws, LC pays lender | Conforming docs under LC |
| 65-70 | Bridge repaid; surplus to trader | Repayment statement |
| Risk | Impact | Mitigation |
|---|---|---|
| MT 799 from non-Swift “bank” | Seller rejects allocation | Use tier-one bank or confirm via correspondent |
| LC document list too long | Discrepancies, payment delay | Stick to standard 3-4 docs; pre-approve wording |
| Cargo value drop > margin | Borrowing-base breach | Hedge futures; maintain equity buffer |
| Buyer credit line pulled | LC issuance stalls | Back-up offtaker clause; political-risk cover |
| Key Metrics | |
|---|---|
| Cargo Value | USD 35 m (FOB West Africa) |
| MT 799 Amount | USD 40 m |
| Bridge Advance | 85 % → USD 29.75 m |
| Bridge Tenor | 70 days |
| Interest Cost | SOFR 5.3 % + 300 bps ≈ USD 480 k |
| Transferable LC Face | USD 37 m |
| Total Financing Cost | ≈ 1.05 % of cargo value |
Timeline: MT 799 Day 1 → Bridge funded Day 6 → LC issued Day 18 → Bridge repaid Day 60 → Trader nets USD 640 k after freight and fees.
Financely coordinates the entire chain. Our 180-lender network holds more than USD 30 billion in deployable capital, covering proof-of-funds issuers, bridge-loan desks, and LC-issuing banks. Transactions between USD 20 million and USD 250 million close in as little as three weeks from mandate.
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