Risk Mitigation
Risk Mitigation and Silent Confirmation
The Forfaitor can also assist with risk mitigation either to cover Sight Letters of Credit or Term Letters of Credit where cash flow is not the concern but the underlying Sovereign & / or Credit risk is unwanted by the exporter or local Bank.
In this case, forfaitor effectively provides a conditional counter guarantee to cover non payment by the issuing bank in respect of fully conform documents validly submitted in accordance with the terms of the Letter of credit. The exporter will forward documents to his local advising / negotiating bank in the usual way.