Owned Standby Letter of Credit (SBLC) Monetization

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Owned Standby Letter of Credit (SBLC) Monetization

SERVICE AND INSTRUMENT DESCRIPTION:

Complete Recourse Loan & Non-Recourse Loan Monetization of Owned Standby Letter of Credit (SBLC) for the intention of Project Funding.

We never require our clients to pay upfront fees for monetization and are only compensated when a project is completed. This is the agreement that we contractually possess with the Hanson Group of Companies and our clients.

Through a Owned Standby Letter of Credit, we can monetize this and provide you with a loan, through careful negotiations with our investors. This is a loan that you will very seldom have to pay back, and if you do end up having payments, they will be at a low rate.

There are 4 Monetizations that We Utilize:

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1. Euroclear – The Euroclear process is extremely fast, and the best part is there are no SWIFT fees. Euroclear is one of the most established financial transaction networks in the world and was founded by JP Morgan in 1968.

 

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2. Bank SWIFT – This (BG) is delivered between the two banks through SWIFT MT799 and SWIFT MT760.

 

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3. DTCC – The Depository Trust and Clearing Corporation issues BGs that we accept. Again, through this process, there are no SWIFT fees, and this company was founded in 1999 and is seen as one of the leaders in the industry.

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4. Bloomberg – The Bloomberg process is extremely fast and there is no SWIFT fees. Bloomberg was founded in 1981 and is one of the most established financial transaction networks in the world.

Important: We have to option to purchase the Owned Standby Letter of Credit (SBLC) in it’s entirety or the client can retain their ownership and take out a non recourse loan. Most clients want to take the route of the Non Recourse loan payment.

The monetizer must return the Owned Standby Letter of Credit (SBLC) to the Issuing bank 15 days before the Standby Letter of Credit (SBLC) expiration.

Monetization LTV for a Non-Recourse Loan:

  • Loan to Value (LTV) for a Owned Standby Letter of Credit (SBLC) of 5 to 500M – 65% Non-Recourse Loan with a Rated Bank instrument or 45% Non-Recourse Loan with a Non-Rated Bank instrument.

Monetization LTV for a Recourse Loan:

  • 5 to 500M Owned Standby Letter of Credit (SBLC) – 65% Recourse Loan with a Non Rated Bank instrument or 80% Recourse Loan with a Rated Bank instrument – This loan has an interest between 2% to 7.5% per annum and can span up to ten years in length.

How Long Does it Take?:

  • Up to two weeks after the paperwork is completed or a week after the instrument is SWIFT, DTCC, or Euroclear.

Disbursement of Loan:

  1. The loan is disbursed in 12 months.
  2. Once the MT-760 is authenticated, three weeks later 20 percent of the loan will be disbursed.
  3. A month after the original disbursement 20 percent more will be given.
  4. Finally, the last 60 percent of the loan will divide over the ten month period and will occur monthly.

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SWIFT Closing Process
  1. Once the paperwork is completed, the client’s sends SWIFT MT799 to the bank to set up the release.
  2. The Monetizer’s bank, after receiving the SWIFT MT799 from the client’s bank, will reply with a SWIFT MT799 RWA to received.
  3. Once the clients’s bank receives the RWA to received the bank instrument, client’s sends SWIFT MT760 to monetizer’s bank.
  4. Once these SWIFT MT760  are received and authenticated, the monetizer’s must respond within a week to grant the non recourse loan.
  5. At the end of a year, the Monetizer has to return the SBLC within 15 days of the anniversary of the contract.

Euroclear & Bloomberg Closing Process:

  1. Once the contract is signed, the client will talk to their institution and instructs them to use the Euroclear Delivery to coordinate the delivery of the BG.
  2. The client’s institution must email a certified receipt of the BG delivery through Euroclear.
  3. Once the receipt is acknowledged the Monetizer has a week to grant the LTV Non Recourse Loan.
  4. The BG has to be returned no more than 15 days before the contract has been signed for a year.

Required Documents:

  1. Fill out the Bank Instrument Monetization Application (Download Below)
  2. Complete the Bank Instrument Monetization Application and email it to: helpdesk@thehansongroupofcompanies.com

Compliance Standard:

  1. Accepted Standard: MUST be delivered by Euroclear, Bloomberg, DTCC, or SWIFT.
  2. Rejected Standard: Bank Instruments from the Forbidden Assets and Financial Instrument Providers List.

Recourse Loan Disbursements Example (100 Million Euros):

Bank instrument face value: $100,000,000.00
Recourse Loan disbursement (80%): $80,000,000.00
Loan commission fees (5%): $4,000,000.00

Total Loan Disbursement: $76,000,000.00

Example of Recourse Loan Disbursement Schedule:

Recourse Loan Disbursements Amount in Euros Date of Disbursements
Loan 1st Disbursement: €15,200,000.00 20% of the loan in 21 days after received and authentication of the MT760.
Loan 2nd Disbursement: €15,200,000.00 20% of the loan 30 days after the 1st disbursement.
Loan 3rd Disbursement: €4,560,000.00 30 days after the 2nd disbursement.
Loan 4th Disbursement: €4,560,000.00 30 days after the 3rd disbursement.
Loan 5th Disbursement: €4,560,000.00 30 days after the 4th disbursement.
Loan 6th Disbursement: €4,560,000.00 30 days after the 5th disbursement.
Loan 7th Disbursement: €4,560,000.00 30 days after the 6th disbursement.
Loan 8th Disbursement: €4,560,000.00 30 days after the 7th disbursement.
Loan 9th Disbursement: €4,560,000.00 30 days after the 8th disbursement.
Loan 10th Disbursement: €4,560,000.00 30 days after the 9th disbursement.
Loan 11th Disbursement: €4,560,000.00 30 days after the 10th disbursement.
Loan 12th Disbursement: €4,560,000.00 30 days after the 11th disbursement.
Download the Standby Letter of Credit (SBLC) Monetization Application Here! Download the Recourse Loan Agreement Here!