Back-to-Back Letter of Credit

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Back-to-Back Letter of Credit

Two letters of credit issued by two banks, one guaranteeing payment by a seller and the other guaranteeing performance by a buyer. Back-to-back letters of credit are intended to minimize the risk of a transaction. See also: Back-to-Back Credit.
References in periodicals archive ?
Back-to-Back Letters of Credit, Guarantees, Forfeiting and all Financial Products
Using irrevocable, confirmed and back-to-back letters of credit to best meet the objectives of the buyer and seller;
In five comprehensive modules, the workbook examines topics including: Using irrevocable, confirmed and back-to-back letters of credit to best meet the objectives of the buyer and seller; Standby letters of credit and their applications, including how they differ from bank guarantees; How contemporary forfeiting is different from traditional forfeiting including explanations of the role of avail and pre-selling assets; Structural risk mitigation using pre-export finance and the changing role of countertrade; and Techniques for hedging against changes in a commodity's value.