What rule set governs the SLOC?
Most SLOCs reference ISP 98. UCP 600 is used where beneficiaries prefer a documentary-credit framework. The chosen rule set appears in the wording and defines presentation, draw, and amendment procedures.
What defines a bankable transaction?
Issuers look for tangible performance risk with low probability of draw. Examples include:
- EPC projects with milestone payments and fixed-price contracts
- Commodity shipments supported by back-to-back off-take agreements
- Government or investment-grade counter-party performance guarantees
Transactions featuring speculative pricing exposure, untested counterparties, or regulatory uncertainty seldom pass credit scrutiny.
How is collateral adequacy measured?
Collateral must cover principal plus interest and potential charges upon invocation. Banks apply advance-rate haircuts (typically 50 – 80 % of net orderly liquidation value) to determine adequacy.
Can the issuing bank be nominated?
Clients may list preferred banks. Final selection depends on sector appetite, geographic licensing, and available exposure limits. All issuers are regulated and maintain established correspondent lines.
Is the retainer refundable?
The retainer is non-refundable. It covers irrevocable third-party costs such as legal opinions and collateral appraisals.
What if contract values change after issuance?
Amendments require written consent from issuer, confirmer (if any), and beneficiary, consistent with UCP 600 Article 10. Additional underwriting and fees may apply.
How is ongoing compliance managed?
Financely monitors key covenants and renewal milestones, conducts periodic sanctions screening, and assists with draw or amendment documentation if needed.