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How can an exporter use a letter of credit to obtain financing?

How can an exporter use a letter of credit to obtain financing?

There is an active secondary market for letters of credit, and an exporter can sell a letter of credit on that market.

Since a letter of credit is an assurance of payment of a specific amount in the future, an exporter can accumulate several letters of credit, securitize those letters of credit, and sell interests in the securitized letters of credit.

Since a letter of credit represents only the possibility of future payment, a letter of credit is of no use to an exporter in obtaining financing.

Since a letter of credit represents a future payment to an exporter for goods sold, the exporter can use the letter of credit as collateral for a loan.

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