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 Back-to-back credit

A transaction in which the existence of one letter of credit serves as collateral/security to support the issuance of a second, though independent letter of credit (called the counter-credit).

 Basis point (bp)

One-hundredth of one percentage point (1bp equals 0.01%). One basis point is the smallest measure used to quote yields on bills, notes, and bonds.

 Berne Union

An international forum for export credit agencies from over 40 countries.  They exchange ideas and experiences, and draw up general conditions for the framework governing the activities of export credit agencies.

 Bid bond

A bond or guarantee, normally issued by a bank on behalf of an exporter in favour of a buyer that provides that if an exporter submits a bid or tender and is awarded the contract, but then fails to conform or to comply with the terms of its tender, the bond may be called. A bid bond gives the buyer some financial assurance that bidders will comply with the terms of their bids. In theory, the calling of the bond should compensate the buyer for the costs of the aborted tender and of re-tendering and re-awarding the contract.

 Bill of exchange

An unconditional written order that binds one party to pay a fixed sum of money to another party on demand or at a predetermined future date.  For example, a bill of exchange is drawn up by the exporter and accepted (and signed) by the importer, who then is responsible for paying on presentation of the bill at the appropriate time.  When the bill bears no date, it is normally referred to as a sight bill. Where credit is involved, bills are variously referred to as time bills, tenor bills, or usance bills. Once accepted, bills can be sold or discounted. Bills accepted by companies with a high credit rating or that have the aval of a bank are often used in forfaiting.

 Bill of lading

A very important document in international trade that provides evidence of receipt of goods by the shipper, gives details of the conditions of transport and destination, and, importantly, normally conveys title to the goods.

 Bond

A financial guarantee, issued by a bank or insurance company, allowing the beneficiary to draw down if the exporter has defaulted, eg if the goods and services are unsatisfactory. Most bank bonds are "on-demand" which means the buyer does not need to justify or provide evidence of his dissatisfaction. See also bid bond, performance bond.

 Buyer credit

An arrangement in which an exporter enters into a contract with a buyer, which is financed by means of a loan agreement between a bank in the exporter's country and a bank in the buyer's country. The export credit agency in the exporting country typically provides a guarantee to the lending bank. The exporter can draw on the loan as the work is done and accepted. The international buyer / bank makes loan repayments to the lending bank in accordance with an agreed repayment schedule commencing after the delivery of the goods or services.  The key benefit of a buyer credit is the Isabella clause.