Definition A way for a contractor to guarantee payment to a subcontractor. When a contractor has received a letter of credit from a buyer, the contractor can then request a letter of credit to be issu [..]

A Letter of Credit under which the documents presented may be presented (substituting at least the invoice) under another Letter of Credit (eg a seller, as Beneficiary under a Letter of Credit, requests the Advising Bank under that Letter of Credit to open another Letter of Credit in favour of the supplier of that Beneficiary on the security of the [..]

An arrangement in which one irrevocable letter of credit serves as the collateral for another; the advising bank of the first letter of credit becomes the issuing bank of the second letter of credit.

A new letter of credit opened in favour of another beneficiary on the basis of an already existing one, not a transferable letter of credit. This type of letter of credit is used for trade intermediaries to open a second credit in favour of a supplier.