MONETIZATION OF BANK
This simply involves converting a bank instrument (Bank Guarantee or Standby Letter of Credit) into liquid cash/legal tender mainly for purpose of project funding. The pre-exquisite for any bank instrument to be monetized remains that such Bank Guarantee (BG) or Standby Letter of Credit (SBLC) must be issued by a well rated bank. In issuing such instrument, it must be a negotiable instrument. In summary, some phrases like: Transferable, Divisible, Assignable, Irrevocable and Unrestricted must be embedded in the verbiage of the MT760 when being issued.
Bank Guarantee and Standby Letter of Credit
All monetization ends up as a recourse loan. With our cash backed Bank Guarantee or Standby Letter of Credit, you are expected to get an 100% LTV because it is cash backed and not asset backed (which has so many variable that has to be considered before determining the LTV by the beneficiary/beneficiary bank of the receiver of such asset backed Bank Instrument), but no bank will give you a 100% LTV except you have an arrangement with them before approaching us for the Standby Letter of Credit or Bank Guarantee. But you can be rest assured to get a maximum value ranging from an 80% to 95% LTV on any Standby Letter of Credit (SBLC) or Bank Guarantee (BG) issued by us. This basically equates to using the Standby Letter of Credit or Bank Guarantee as a collateral for a loan with your financial institution in simple terms.
In conflict to the point raised above, if you are using an intermediary for your monetization, some has structures in place for a fee or interest who can monetize your Standby Letter of Credit or Bank Guarantee for a non-recourse loan that they intend to personally guarantee. This is not a miracle, but with our experience in the industry, some of the power play monetizer have an exit in place that need a paper from a third party for them to enter into a trade that probably makes up to 400% on the paper. This gives them the play-ground to cover the interest on the credit line/recourse loan from the bank, pay you the LTV on the Standby Letter of Credit or Bank Guarantee and still make great profit. Unfortunately, it is not easy to come by such power players.