FINANCE WHEN YOU NEEDED MOST…!!!! YIELD 4 … presentation.pdf · authority to issue guarantees. SBLC’s are very similar to demand guarantees ... A counter standby – backs the

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FINANCE WHEN YOU NEEDED MOST…!!!!

YIELD 4 FINANCE (P) LTD.

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Yield4Finance(Y4F) providesacomprehensiveapproachtostructuringcomplextradetransactionsforavarietyofstakeholders,includingimporters,exporters,andtradingcompanies.Y4F’sexperiencedteamunderstandsthatprovidingtrade=inanceintoday’svolatileglobalmarketsdemandscreativityand=lexibility.Assuch,Y4Futilizesanarrayoftradeandexport=inanceinstrumentstomitigateunnecessarycreditriskswhileincreasingclients’accesstoworkingcapital.Y4Fprovidesspecializedsupplychain=inancefacilities,tailoredtothespeci=icsofeachdeal.


Y4F’sgeneralservicestypicallyfallintooneofthefollowingfour(4)categories:•  DocumentaryLettersofCredit•  StandbyLettersofCredit•  Guarantees•  SWIFTMessaging

InkeepingwithY4F’smissionstatement,Y4F’steamtailorseachinstrumenttothemeettherequirementsofeachtransaction.Byprovidingthehighestqualityservicestoclientsandpartners,Y4Fmaintainsanunparalleledreputationamongtheinternationaltradecommunity.Fromthe=irstmomentofcontact,Y4Fwillguideyouthroughthedifferentstagesofyourdeal,untilthetransactionis=inalized.


WHATISADOCUMENTARYLETTEROFCREDIT? Adocumentaryletterofcreditisaguaranteeoffromtheissuer(i.e.issuingbank)tothebene=iciarythattheissuerwillpaythebene=iciarymoneywhenthebene=iciaryprovidescertaindocumentstotheissuerinacertainmannertimeandplace.Adocumentaryletterofcreditisissuedbyabankora=inancialinstitution.Theletterrofcreditassuresthesupplier(bene=iciary)thattheywillreceivepaymentuptotheamountstatedintheletterofcredit,providedthatthebene=iciarymakesacompliantdocumentpresentation. Continued…


Oncethebene=iciarymakesacompliantpresentation,theIssuinginstitutionwillmakeapayment.Evenifthebuyer(applicant)cannotpayforthebene=iciary'sservices,theissuerisobligedtohonorthepresentation.Documentarylettersofcreditaremostlyusedininternationaltransactions,wherethebuyerandsellerhaveyettoestablishastrongrelationshipand/oroperateindifferentcountries.Whenconcludingadealwithabuyerfromadifferentcountry,thesellerisexposedtorisksduetothephysicaldistancebetweenthetwoparties,foreignorunknownlegalsystems,andlackofknowledgeaboutthebuyer.Asellermaybehesitanttoentersucharisk-sensitivedealwithoutaletterofcreditas=inancialsecurity.Inthesecasesthecreditworthinessoftheissuerstandsinplaceofthecreditworthinessofthebuyer–givingthesuppliergreatercomfortthathewillbepaid.


HOWDOESDOCUMENTARYLETTEROFCREDITWORK? Thepartiestoaletterofcreditarethesupplier(bene=iciary),theissuingbank,thebuyer(applicant),whoisalsothebank'sclient,andoftenanadvisingbank,ofwhomthebene=iciaryisaclient.AdocumentaryletterofcreditrequiresthattheBene=iciarypresentspeci=icdocumentsbeforeitsexpiration.ThesedocumentsrelatedirectlytothedealbetweentheBene=iciaryandtheApplicant;theyshowthattheBene=iciaryhasful=illedhispartofthetransaction.Continued…


OncetheBene=iciarymakesacompliantpresentation,theissuerpaysregardlessoftheApplicantsactions.Anissuermightmakeapaymentevenifhe=indsatechnicaldiscrepancyinthedocuments,solongasheiscon=identthatthedealisgoingasplanned.Whenanapplicanttakesadvantageofadocumentaryletterofcredit,hefreesupcapitalthatwouldotherwisebetiedupwiththebene=iciarytheformofasecuritydeposit.Duetothisabilitytoboostanapplicant'scash=low,documentarylettersofcreditsareaveryimportantaspectofinternationaltradefordealsofallsizes.TheUniformCustomsandPracticeforDocumentaryCredits(UCP)laysthelegalframeworkforalldocumentaryletterofcredit.ThecurrentversionisUCP600,whichbecameeffectiveonJuly1st,2007.


OURDLCPROCESS


WHATISASTANDBYLETTEROFCREDIT? Itisaguaranteeofpaymentissuedbyabank/FIonbehalfofaclientthatisusedaspaymentincaseofdefaultbytheapplicant.StandbyLettersofCreditareissuedforuseinawidevarietyofcommercialand=inancialoperations.Standbylettersofcreditareverymuchalikedocumentarylettersofcredit,theirmaindifferenceisthatunlikeDLC’s,theyonlybecomeoperativeincasetheapplicantdefaults,thenthebene=iciaryinwhosefavortheSBLCwasissued,candrawontheSBLCanddemandpayment.Continued…


Historically,StandbylettersofcreditweredevelopedbecausetheUSregulatorlegallylimitedUSbank’sauthoritytoissueguarantees.SBLC’sareverysimilartodemandguarantees,whichalsorequirethatthepresentationofstipulateddocumentsbecompliantwiththetermsandconditionsoftheguarantee.SBLC’sandguaranteesaredifferentintermsofprotection,theybothservetheprimarypurposeofmakingsurethatsellersgetpaid,butwhileastandbyletterofcreditprotectstheseller,abankguaranteeprotectsbothsides,sinceitalsoprotectsthebuyerincasethesuppliernevershipsthegoodsorshipstheminadamagedcondition.Standbylettersofcreditareavery=lexibletool,makingthemasuitableproductforsecuringawiderangeofpaymentscenarios.


HOWDOESASTANDBYLETTEROFCREDITWORK? AbreakdownofSBLCtypesisprovidedbelow:1.  Aperformancestandby–backsacommitmentto

performotherthantopaymoney/fundsandincludesanobligationtopayforlosesoccurringfromadefaultofthebuyerintheprocessofcompletinganunderlyingtransaction.

2.Anadvance-paymentstandby–supportsanobligationtoaccountforanadvancepaymentmadebythesuppliertothebuyer.Continued…


3.Abid-bondortender-bondstandby–backsanobligationofthebuyertoexecuteacontractifthebuyerisawardedabid.4.Acounterstandby–backstheissuanceofanother,separatestandbyletterofcreditorotherundertakingbythesupplierofthecounterstandby.5.A=inancialstandby–supportsanobligationtopayfunds,includinganyinstrumentevidencinganobligationtorepayborrowedmoney.6.Aninsurancestandby–supportsaninsuranceobligationoftheapplicant.Continued…


7.Acommercialstandby–backsthecommitmentofabuyertopayforgoodsorservicesintheeventofnon-paymentbyothermethods.8.Adirect-paystandby–intendedtobetheprimarymethodofpayment.Itmayormaynotbelinkedtoadefaultinperformanceorpayment.



WHATISAGUARANTEE? AGuaranteeisapromiseofpaymentfromtheGuarantortotheBene=iciarythattheGuarantorwillpaythebene=iciarywhenthebene=iciarysubmitscertaindocumentsormakesaspeci=icdemandtotheGuarantorinacertainmannertimeorplace.Guaranteesprovidecomforttothebene=iciary;incasetheapplicantfailstomeethisobligations(either=inanciallyorbyperformance)asperthecontractmadebetweentheapplicantandthebene=iciary,thebene=iciarywillhavetheguaranteetoturntoforpayment..Continued…


Havingaguaranteeissuedinsupportofaclient’stransactioncanhelptheclientgrowandexpandtheirbusinessbypostponingcurrentpaymentsforgoodsand/orservicestoalaterdate,providecomforttobuyers,allowclientstobidontransaction,withoutrequiringthatITF’sclientstieuptheiravailablecash.


TYPESOFGUARANTEES ABankGuaranteeisaversatiletoolwhichcanfunctionasanumberofinstruments:abidbond,aperformancebond,andadvancedpaymentguarantee,awarrantybond,aletterofindemnity,apaymentguarantee,arentalguarantee,oracon=irmedpaymentorder.1.  Abidbondisusuallyissuedforbidderson

constructionorsimilartenderbasedprojects.Abidbondisadebtsecuredbyabidder.Ineffect,itservestosecurethebidder'sinvestmentintheprojectandtodiscouragebiddingbylessseriousplayers.Abank

Continued…


guaranteecouldbepresentedasapartialalternativetothe=inancialcapitaltypicallyrequiredbyaprojectowner.2.Aperformancebond,orcontractbondisutilizedintherealestateindustrytomakesureacontractorcompletesadesignatedproject.Aperformancebondisissuedbyabank,insurancecompanyora=inancialinstitutioninfavorofabene=iciarybyorderofanapplicant,againsttheapplicant’sfailuretomeetitsobligationsasperanunderlyingcontract.Aperformancebondoftencovers100%ofthecontractvalueandcanreplaceabidbondwhentheapplicanthasbeenawardedacontract.Ifeffect,applicantsuseperformancebondstocomfortsupplierswhoareconcernedwiththeprospectthattheapplicantmightbecomeinsolventorotherwiseunabletoful=illhiscontractualobligations.Incaseofinsolvencyoftheapplicant,thebene=iciaryreceivescompensationthatshouldease=inancialstressesorotherdamagescausedbythecontractor.Continued…


3.Anadvancepaymentguarantee,oradvancedpaymentbondisanagreementwhereanissuerundertakesresponsibilitytoreturnanadvancedpaymenttothebuyer,shouldthesellerfailtomeethisobligations.4.Awarrantybondisacontractbetweenaproject/propertyowner,acontractor,andasuretycompany.Thebondpromisesthatanydefectsfoundintheoriginalprojectwillberepairedduringthewarrantyperiod.Frequentlyusedinthehousingandconstructionsector,awarrantybondguaranteesaninvestorthatacontractorwillresolveallcovenantsthatrelatetomaterialsusedandworkdonebeforethewarrantyonthematerialsexpires.Continued…


5.Aletterofindemnityisaninstrumentguaranteeingcontractualprovisionswillbemet;otherwise=inancialreparationswillbemade.Aletterofindemnityisoftenutilizedtorequestreplacementsforlostsharesfromacompany'streasury.6.Apaymentguaranteeprovidesthesupplierwith=inancialsecurityincasetheapplicantfailstopayforgoodsorservicessupplied.Paymentguaranteesmitigatecreditorcountryriskwhenthesuppliershipsthegoodsonanopenaccountbasis,whichistosay,beforereceivingpayment.Paymentguaranteesaretypicallyissuedtocoverdebtsincasesofnon-paymentarisingunderatransactionoroveraperiodoftime.Theinstrument'swordingisbasedontheContinued…


termsoutlinedintheoriginaldebtagreementbetweentheapplicantandthebene=iciary.Theapplicantwillmakearepaymentbasedontheseterms.Sometimesapaymentguaranteecanbebackedwithcollateral,suchaspropertyorassetthatispre-approvedbythelender.7.Rentalguaranteespromisepaymenttoalandlordincaseatenantdefaults=inancially.Sincetheriskofatenantdefaultingcanbeextremelyharmfultoapropertyowner,rentalguaranteesareextremelyvaluabletoolswhichgivesecuritytoindustrialandcommerciallandlords.Continued…


8.Acon=irmedpaymentorderisanirrevocableobligationtopay.Inmostcases,thecon=irmedpaymentorderisconditionalonsuccessfulcompletionofaproject.



SWIFT SERVICES

READYWILLINGANDABLE

Whatisareadywillingandable? Itisadocumentisissuedbybanksor=inancialinstitutionsonbehalfofclients,demonstratingintentandcapability(both=inanciallyandlegally)toenterintoa=inancialtransaction.RWA’sareoftenalsoreferredtoasbankcomfortletters.Continued…


Howdoesreadywillingandablework?

Weprovidereadywillingandable(RWA)lettersforourclients,usuallyviaMT799message.AnRWAcon=irmsthatanassettheapplicanthaswiththeissuerisgood,clear,clean,ofnon-criminalorigin,andisunencumbered.


PROOF OF FUNDS What is a proof of funds? Itisadocumentorbankstatementthatdemonstratesthataperson/companyhastheabilityandthemoneyto=inalizeatransaction.Itspurposeistoensurethatthe=inancialabilityrequiredforthetransactionisprocurableandlegitimate.Itisoftenusedforfundingprojectsthatrequirelargeamountsofmoneytoinvestin,speci=icallyrealestatetransactions.Continued…


Howdoesproofoffundswork? Byissuingaproofoffunds,thebankapprovesthattheentity/personhasthequotedfundsavailablewiththem.Duringthe=inalizationofatransaction,theapplicantpresentsthePOFtothebene=iciary,assuringthemthatthebuyercanaffordthetransaction.Anotherimportantaspectinthedocumentisitsvalidity.Bringingadealoflargescaletakestimetobringtoaclosure,thebene=iciaryneedstobeawareofthedateofexpiryoftheproofoffunds,andaimto=inalizethedealbeforethedocumentexpires.Proofoffundscanalsobeleased.Insuchcasesaclientpaysafeeandreceivesacashdepositintotheirbankaccount.Continued…


Whendeposited,thefundsremainlockedandcannotbewithdrawnorusedbytheclient,thussafeguardingtheassetholder.Anotherpossibleuseisablockedproofoffundsletterissuedbyagovernmentora=inancialinstitution.Governmentsusethistooltorestrictthemaximumamountoffundsthatcanbeusedinagiventimeperiod.Thistoolhelpscountriescontroltheircash=lowandmanagetheirbudget.Otherpossibleusesforblockedproofoffundsareduringemergenciessuchastimesofwarorintheeventofanaccountholderpassingaway.Continued…


Itshouldbenotedthatproofoffundsarebeingsometimeusedbyconartiststocarryout=inancialscams.Thus,whenagreeingtobepresentedwithaproofoffunds,itisnecessarytothoroughlyinvestigatetheotherpartytothetransactionandrunningsuf=icientduediligencechecks.




Alliances MajorBanksforDocumentaryLeNerofCredit BankLeumi-USAIsraelDiscountBank-USABankWinter-AustriaSantanderBank-USAHanamiBank-USABNPParibasHKHSBCHKStandardCharteredBankHKChinaConstructionBank-HKOCBBank-HKContinued…


DashSingbank-HKDBSBank-HKUCObank-HKU.S.CreditCorp–USA MajorBanksforSBLC/BG: BankWinter-AustriaStandardCommerceBank WealsoofferanumberofissuinginsRtuRons: CNF-ItalyPLGCapitalBank-STLuciaContinued…


RicomTrust-MoscowPointBank-UKGeneralEquity-NZCreditBostonInternational-USASwissTradingandFiduciaryTrust-SwitzerlandPanamianTrustandSavingsGuarantee-PanamaAnametrics-MalaysiaKwanHua-ChinaCrownFinancialMerchantBank-UKHRBank-UKEUROPABankPublicLimited-UKFINCreditITALIA–ItalyAcumenBankLimited-UKTrainingBankLimited–UK


InstrumentIssuanceProcedure 1.Clientcompletesapplicationform.2.Y4Fsendsclient:

•  Completeinstrumentdraft•  Invoice•  Agreementtobesignedbyclient

3.Clientreviewsthedraftwithanyrelevantthirdparties(i.e.bene=iciary)4.Clientrequestchangesby=illingoutY4Famendmentform.5.Clientreceivesreviseddraftandrepeatsstep3Continued…


6.ClientprovidesY4Fwiththefollowing:

•  SignedandapprovedcopyofthefinaldraGforissuance•  CerJficateofincorporaJonofClientCompany•  ListofshareholdersofClientCompany•  PassportcopyofmainshareholderofClientCompany•  Y4FAgreementbysignedbyauthorizedsignatoryofClient

Company

7.Y4Freceivesrequiredissuancefees8.IssuinginsJtuJonissuesperwordingclientapproved.9.ClientreceivesswiGcopyoftheissuedinstrument.


THANKS REQUESTFORADISCUSSION

India:+91-7837039490India:+91+9888672938U.A.E:+971-588607792Email:[email protected],[email protected]:www.yield4Iinance.com/

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FINANCE WHEN YOU NEEDED MOST…!!!! YIELD 4 … presentation.pdf · authority to issue guarantees. SBLC’s are very similar to demand guarantees ... A counter standby – backs the