- Instrument
- Confirmed and discounted LC
- Raised by
- Beneficiary
- Priced as
- Commission plus discount margin
- Result
- Risk removed and cash today
Why the two legs belong in one request
Under a usance credit the beneficiary is exposed twice over: to the issuing bank’s ability to pay, and to the wait until it does. Confirmation solves the first — a second bank adds its own undertaking. Discounting solves the second — that bank advances the money now and waits for maturity itself.
Run separately, the two legs fight each other. A discounting bank pricing an unconfirmed credit is pricing the issuing bank’s country risk into its margin. A confirming bank that will not also discount leaves you hunting for someone who will, on a credit whose economics have already been set.
Asked together, one bank prices one exposure it fully understands, and quotes a single all-in cost — commission and margin in the same number. Our LC suite gives you the platform to bid or get competitive rates for your transactions lightning fast, whether it is LC confirmation, LC discounting, or both.
The shape of the flow
One credit, two things bought at once: the undertaking that makes it safe, and the early payment that makes it liquid.
How it works on TradeOrigin
One request, one set of bids, one acceptance covering both legs.
Post the credit and ask for both
Upload the LC and state that you want it confirmed and discounted. Issuing bank, country, tenor, amount and the documents called for drive the price of both legs.
Banks bid one all-in cost
Confirming banks quote commission and discount margin together, sealed from each other, so you compare a single number rather than assembling one.
Accept once
One acceptance fixes the confirmation and the discount on the same terms and the same record.
Present, get paid, and forget maturity
On compliant documents the confirming bank pays you net of the discount, and collects from the issuing bank when the credit falls due.
Who it is for
Selling into difficult markets
You need the credit to be safe and the cash to arrive now, and you would rather not run two processes to get there.
Where cycle time is the margin
Waiting out a usance credit costs you the next trade. Confirmation alone does not fix that.
Pricing one exposure
Confirming and discounting the same credit is one piece of risk, and easier to price as one.
What you get
One number to compare
Commission and margin quoted together, so the cheapest headline cannot hide the expensive leg.
No orphaned confirmation
You never end up holding a confirmed credit nobody will discount.
One bank, one relationship
The same bank carries the undertaking and the funding through to maturity.
Sealed pricing
Bids stay confidential, so the all-in cost reflects the credit rather than what a competitor just quoted.
What the bank will ask for
Uploaded once, against the deal, and visible only to the counterparties on it.
Questions
Do both legs have to go to the same bank?
Not necessarily, but they usually do — and that is the point of asking for them together. A bank confirming a credit is the natural bank to discount it.
Can I confirm now and discount later?
Yes. The credit stays on the platform, so discounting can be raised against the same record afterwards. You may just pay more for it than you would have upfront.
Is the discount with or without recourse?
A term of the facility, stated in the bid. Without-recourse purchases of longer paper are usually structured as forfaiting.
Related
LC Confirmation
Add a second bank’s undertaking to a letter of credit, priced by banks competing for the confirmation.
ProductLC Discounting
Turn an accepted deferred-payment credit into cash today, at a discount rate banks bid for.
Bank to bankConfirmation & Discounting (FI)
Confirm and fund another bank’s credit in one mandate — one exposure, one price, one correspondent.