Bonds Concerning Letters of Credit

Bonds Concerning Letters of Credit

Bonds backed by the State Treasury

Key benefits

• we limit the risk incurred by a bank as a result of short-term financing (with repayment period of less than 2 years)
• we are able to issue bonds for up to 100% of the bank’s secured amount of receivables
• bonds are irrevocable and payable upon first demand
• a fast track procedure for issuing bonds - bonds are issued within a framework of limits previously set by KUKE for each debtor 

Entities eligible
Banks entitled to receivables due as a result of confirming, discounting and postfinancing of letters of credit issued by foreign banks (registered in countries other than Poland, but with the exception of EU member states, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and USA).  Letters of credit must be issued in relation to the export of domestic goods and services by Polish businesses.

Subject of the bonds
The bonds are issued in relation to:

• confirmation of a letter of credit by a beneficiary of the bond
• receivables resulting from a letter of credit discounted by a beneficiary of the bond
• receivables concerning postfinancing of a letter of credit

Bonds cover losses incurred by a beneficiary as a result of the debtor’s failure to meet its obligation within a payment term specified in the letter of credit or postfinancing agreement, in cases when the non-payment is a result of commercial or political risk.

Costs

• confirmation of a letter of credit – our fee is determined based on the amount of the commission charged by the beneficiary of the bond for confirming the letter of credit, and on the debtor’s country classification
• discounting and postfinancing of a letter of credit – our fee is determined based on the bond sum, the payment term of receivables, and on the debtor’s country classification