Ovadya Funding Group International 2006 (updated in 2008). - 17 р.Extract:
"Letters of credit accomplish their purpose by substituting the credit of one party for another, such as a bank, corporation, or other financial institution for that of the customer, for the purpose of facilitating trade, balance sheet enhancement, or project financing. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a specific or specific set of transaction(s), whereas the standby letter of credit is a secondary payment mechanism. The funds or assets securing an LOC may be seen as primary collateral, whereas the assets, or future assets of a project, for example, may be utilized as secondary collateral."
