For a price indication you will have to provide the answers to our "2020 Credit Enhancement Instruments Application" form, which you submit with the suggested draft verbiage of the financial instrument that you seek.
We provide Financial Instruments for your Credit Enhancement.
Credit Enhancement is a strategy to improve the credit risk profile of a business. Usually the aim is to obtain better terms for a loan or to repay debt. Credit Enhancement is used to reduce the risks of a lender or investor in structured financial products. Credit Enhancement usually reduces the default risk of the company's debt and thus can make it eligible for lower interest rates or to enable a transaction in the first place. A company that engages in Credit Enhancement is providing assurance to the lender for re-payment of a debt by providing additional collateral, an insurance guarantee, or arranging a third-party guarantee.
The borrower requires an additional cushion to negotiate better terms with the lender in lieu of his own commercial or financial assets.
The Collateral Provider provides this additional comfort in form of a Bank Guarantee, a Standby Letter of Credit or other collateral.
We can arrange your required Letter of Credit or any other financial instrument against payment of a fee. The arrangement fee depends upon the strength of the financial instrument that you seek and upon the verbiage that you require and the rating of the issuing bank we will have to employ to provide the service for you. The FRL Group has the capacity to issue instruments of any face value you may require with no upper limit - as long as you have the funds to pay for the required arrangements. You will FIRST have to pay for the Credit Enhancement service to be arranged for you, to receive the benefit of the transmission of a Credit Enhancement instrument to your lender.
These Trade Finance Enhancement services and instruments are available and not just limited to Import and Export. Based on our existing relationships with Banks and Financial Institutions, the following transactions can be facilitated:
- Letters of Credit to secure any type of commodity shipment
- Property Guarantees to secure a procurement of a property
- Standby LC and Bank Guarantees
- Performance Guarantees are issued to buyers that are ready to issue LC's
- Construction Guarantees
- Default Payment Guarantees
- Guarantees to secure a Credit Facility
- Bid - Guarantees for Tenders / Projects
- 3 to 5 year Guarantee Bond based on a Loan Agreement
Ready, Willing and Able (RWA) SWIFT messages are sent to
- secure a contract
- initiate a buy / sell transaction
- confirm RWA to proceed with a transaction or a contract.
- confirm that a Guarantee can be issued subject to certain conditions being met
Proof of Funds SWIFT messages can be used to
- show capability to perform
- show capability procure a certain quantity
- show capability and request a dip test authorization (for Fuel)
- show capability to procure and request for a POP (Proof of Product)
Trade Finance Credit Enhancement is available against payment of a fee
Do you seek to obtain a Bank Guarantee or a Standby Letter of Credit? If YES, then we can help you with our professional service and more than a decade of in depth financial industry insight and experience.
Will your own bank carry the risk for you?
Since you seek a financial service, your first source for the service certainly is your own bank. Banks provide bank guarantees and Standby Letters of Credit for their qualified clients. This is not new. Did you dare, or even take the effort to ask your bank about this? What did your bank say when you wanted the service from them?
We do not know what they might have told you, however since you seek alternatives, we have to assume that you did not get the service from your own bank, probably because you do not qualify. Not qualify means that your pledged, or available assets and your credit rating does not allow your bank to actually guarantee for you in the millions that you possibly seek.
As a result, you seek a third party to take exactly the same risk which your own bank would not underwrite. You seek a financial service, basically guaranteeing for you for millions of dollars on the basis of the same unacceptable collateral and on the basis of the same unacceptable credit risk. You probably seek the service of a first class bank which your own bank is not prepared to render to you. By the way: Is your own bank a first class and top rated bank?
How do you expect that a third party will 100% guarantee for you on such a basis?
No serious business man, financier or investor will carry a risk on the same basis on which a bank already declined the service. So you will have to go a different route. What are the options?
An option would be a confirmation from your bank to accept the instrument for Credit Enhancement and providing a confirmation to return it unencumbered PRIOR MATURITY. This way, we or the issuer provides valid collateral and the risk of being called to pay for your eventual debt is not entirely excluded, but limited.
An alternative to this could be a restrictive verbiage of the Bank Guarantee or Standby Letter of Credit which prohibits that your receiving bank can ever call on the instrument. Such an instrument is usually issued by low-, or unrated financial institutions.
But would you get funded if such an instrument is sent to your own bank?
Now let’s talk about Arrangement Fees!
Obviously, there is the issue of you having to pay for the arrangements to structure and avail such an instrument for you. No serious provider will carry the risks of the transaction and on top of that advances the costs that are involved to structure (make the arrangements) for such an instrument for you. Why should he? So you will have to have the cash funds to allow such arrangements and you will have to be prepared to pay for the arrangements that are required to have such an instrument issued for you.
For a transaction involving major international banks and the transaction being of relevant size (usually not less than USD 20 M) you will have to have about 1%, but at least USD 355,000 in cash available. To get an instrument issued via SWIFT out of an unrated bank or financial institution, you will (indicative) have to have not less than 6% available in cash.
And let us talk about Leasing Fees!
On a major international bank transaction, the actual leasing fee for one year will have to be paid by you, respectively your receiving bank, once they fund against the instrument and this can be within 30 to 40 days of transmission of the instrument. For this, the provider will have to make sure that your receiving bank is actually ready to fund you on this basis (the Bank Guarantee or Standby Letter of Credit) before an instrument is sent via SWIFT. This usually involves an initial confirmation from the receiving bank issued to you. In the second step, it involves a SWIFT MT799 Pre-Advice and only once your receiving bank answers positively, the SWIFT MT760 is sent.
Also note: A major international bank transaction will only be available, if the instrument is actually sent to your very own bank, not to a third party bank, or to the benefit of a third party funder. It goes without saying: You will have to be an acceptable applicant for such a service in the first place.
On a transaction involving unrated banks or financial institutions, such leasing fees are to be paid before the instrument is sent. We are not aware that of any of these institutions would issue a SWIFT message for a client, without being (completely) in funds in respect to leasing fees.
Unrated banks or financial institutions at times are willing to expose themselves to larger risks and instruments can also be sent to third party banks or beneficiaries. They will safeguard themselves in different ways, and in respect of getting paid the leasing fee, always by sending the instrument via SWIFT only once they received the agreed leasing fee in their account.
NONOS in major international bank transactions
- Transactions of less than USD 20 M
- Instrument is not sent to any third party bank or funder
- A no front fee transaction is broker talk
- No deal if you do not have and cannot prove the Arrangement Fees
NONOS in transactions involving unrated banks or financial institutions
- Transactions of less than USD 5 M
- A no front fee transaction is broker talk
- No deal if you do not have and cannot prove the Leasing Fees
After you have read all this: How can you seriously believe that there are no front fee transactions available, especially to people who have been declined by their own bank? You will find plenty of broker offers on the internet claiming just that: “No Front Fee Transaction”. Since we are very active in this arena, we also receive plenty of offers, many of them stating that there is no front fee. All of them without proof of any performance. We usually collect more than 600 such offers during any one year which we screen and follow up through our own channels. (You can buy our current list, which includes names and emails, at EUR 300.00 and research yourself) None of these people has ever proven that a valid instrument was issued for their own client. On rare occasions, when “prove” was provided, then it was through a sanitized, unverifiable instrument sent by an unidentified “somebody” to an unknown party. And we received the same PDF from different brokers, many times over. None of these people have ever been able to prove a fee or commission payment that they might have paid out, or have received on a successful transaction.
A no front fee transaction is typical talk of brokers who have never seen a genuine Bank Instrument issued, who are blinded by big figures, have no basic knowledge of how such an instrument can be arranged and just hope for that “one big deal” that will make them rich. It is also the usual teaser of clever “fake providers” who use such “naive” brokers to cheat clients for Arrangement Fees that will never be seen again. First it is claimed to be a “no front fee transaction” and then front fees have to be placed. First a small sum, then some more is required, one time, two times or more often with the aid of fake bank confirmations provided via fake fax messages, or emails sent from fake bank domain names and servers. Have you ever personally met a genuine provider who performed for you or your client and who risks 100% of his own cash funds for a simple fee of 6%?
So be aware of such offers that “seem to be too good to be true”. In all cases we researched, none of them turned out to be true or genuine. Have good common sense applied when you ask a third party to do something for you which your own bank would not do for you.
With more than a century of experience, countless phone and skype calls, and many hundred thousand of emails received, read and sent, we know what is possible. We have learned how “certain” issues can be solved and overcome. But we also know how to protect ourselves, our time and our capital and still can provide valid Credit Enhancement to qualified clients. We gladly discuss this and our possibilities for you, if you are a “qualified” client guided by common sense with relevant credit possibilities at your own bank and the cash funds available which allow us to structure your solution.