Definition of letter of credit in US English:

letter of credit

noun

  • A letter issued by a bank to another bank (typically in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.

    • ‘To secure the event two years ago, the club had to provide a letter of credit to the organisers stating that they would refund any shortfall in ticket money if too few spectators showed up.’
    • ‘So instead of carrying a letter of credit on a balance sheet, a creditor will securitize it and sell it on the open market.’
    • ‘By way of illustration, take a case in which the customer requests the bank, or other institution, to issue a letter of credit or guarantee to back his purchase of goods.’
    • ‘These include packing credits, documents against acceptance, documents against payments, letter of credit, structured trade and more.’
    • ‘The letter of credit had to be issued by Mar. 31, 1975.’
    • ‘The mode of payment shall be by a non-operative, bank guarantee, standby letter of credit or a financial guarantee bond with a validity of sixty days.’
    • ‘Asian manufacturers typically require either payment in advance or a letter of credit from a bank.’
    • ‘The same number of copies should be submitted to the bank as are required in the letter of credit.’
    • ‘The Government provided a guarantee for banks' deposit and other claims, such as borrowing, guarantee and letters of credit issued by the banks.’
    • ‘On receiving that guarantee, the merchant bank would open a letter of credit in favour of Medrom and Medrom would ship the goods.’
    • ‘The foreign bank requires a stand-by letter of credit from them in order to give us the loan to pay them back.’
    • ‘The bank will also introduce facilities like letters of credit and bank guarantees for corporate clients.’
    • ‘The letter of credit was issued in London through a London bank in the ordinary course of commercial dealings.’
    • ‘Well, the short answer is, how could we sign that guarantee before the stand-by letter of credit was in place?’
    • ‘In the course of the judgment it became necessary to consider whether there was a good defence of change of position in respect of the proceeds of a letter of credit upon which payment had been made by mistake.’
    • ‘For example, when sourcing from Asia, the importer must make payment against a letter of credit at the time that the goods are shipped, resulting in tied-up funds for goods that are not yet in inventory, she said.’
    • ‘When the order is ready to be shipped, freight forwarders should be able to review the letter of credit, commercial invoices, packaging list, etc. to ensure that everything is in order.’
    • ‘Few banks were willing to finance these transactions, but among the few that issued letters of credit to back barter deals were Bankers Trust of New York and First Security Bank of Utah.’
    • ‘A letter of credit is issued by a bank and guarantees payment to the exporter at a specified time, generally, thirty, sixty, or ninety days, on behalf of the importer.’
    • ‘The Bank for Cooperatives issued a letter of credit for $66 million for the purchase, and $30 million more for seasonal operating loans.’

Pronunciation

letter of credit