Okuzeka
Finance & Banking vocabulary · Trade Finance

Back-to-back letter of credit

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, back-to-back letter of credit means: A second documentary credit issued using an existing credit as support for financing a related purchase.

In Turkish: karşılıklı akreditif

How it is used

The two credits remain separate instruments; compare their documents, amounts and deadlines.

Example sentences

  1. The trader arranged a back-to-back letter of credit for its supplier.

    The supplier receives a separate credit supported by the first transaction.

  2. Different shipment deadlines created a mismatch in the back-to-back letter of credit arrangement.

    The two instruments must be coordinated despite their separate terms.

Common collocations

  • back-to-back letter of credit arrangement
  • issue a back-to-back letter of credit
  • letter of creditA bank's written promise to pay the seller in an international sale, provided that the seller presents the required documents, such as the bill of lading and invoice.
  • trade financeBanking products that help importers and exporters pay and get paid safely, and that finance goods while they are produced, shipped or sold.

More terms: Trade Finance

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This page explains English vocabulary for learners. It is not financial advice.