Standby Letters of Credit for Construction Projects

Performance, advance payment, and debt-service SBLCs issued under ISP98, delivered by MT760, backed by proper collateral and covenants. No “leasing.” No shelf instruments. Bankable only.

• Performance SBLCs: 5–20% of contract value to secure delivery and warranty periods.
• Advance Payment SBLCs: Secures mobilization funds and amortizes as milestones complete.
• Debt-Service SBLCs: Covers interest and scheduled principal during construction or ramp-up.
• Confirmation: Local bank confirmation where the beneficiary requires domestic risk.
• Wording and Controls: ISP98 text aligned to the contract. Clear draw mechanics. Objective conditions.

Stage	Purpose
Bid and Award	Bid security and performance assurance to sign EPC quickly.
Mobilization	Advance payment guarantee so the owner releases mobilization cash.
Construction Debt	Debt-service SBLC to improve pricing and close the gap for lenders.
Warranty / O&M	Maintenance or defect liability security across the tail.

Instrument	Irrevocable Standby Letter of Credit (SBLC) under ISP98
Purpose	Performance, Advance Payment, or Debt-Service coverage for a named construction contract or facility
Amount	5–20% of EPC contract value, or sized to 6–12 months debt service
Tenor	12–36 months with extension options to cover warranty or ramp-up
Issuer / Confirmation	Rated bank issuer. Optional confirmation by beneficiary’s preferred bank
Delivery	SWIFT MT760 to beneficiary’s bank, advice via MT710/799 as needed
Collateral and Controls	Cash margin or asset-backed line. Reimbursement agreement, blocked accounts, step-in rights, and reporting
Fees	Issuer 2–5% per annum on exposure. Arranger retainer USD 50k–100k. Success fee 2–3% where we place debt/equity
Timeline	Indicative 2–6 weeks post data room, subject to KYC, credit approval, and documentation
Conditions Precedent	Executed EPC or facility docs, corporate approvals, KYC/AML, sanctions screens, collateral perfection, insurance where relevant
Governing Law	New York or English law for the undertaking and related agreements

1. Review EPC contract, budget, schedule, counterparties, and risks.
2. Select SBLC type and size. Align wording to objective draw conditions.
3. Agree collateral and controls. Form collateral SPV if required.
4. Run issuer credit process. Complete KYC, legal, and sanctions checks.
5. Finalize text. Send MT760 upon satisfaction of conditions precedent.

• Signed or near-final EPC or construction contract with clear scope and price
• Corporate documents, ownership chart, board approvals
• Financial statements or management accounts and forecast model
• Source of funds for cash margin or support for asset-backed line
• Insurance schedule and, where relevant, hedging policy

We work on a best-efforts arrangement basis with regulated partners. Typical issuer fee is 2–5% per annum on the exposure. Our standard retainer is USD 50,000 to 100,000. When we arrange collateral, debt, or equity, a success fee of 2–3% applies at closing.

Third-party costs such as legal, confirmation, and account control are for the client. Where a transaction scores strong on credit and execution, we may defer a portion of our internal costs to closing.

Can an SBLC replace project funding?

No. It is a guarantee. Funding still requires debt or equity. The SBLC improves certainty and pricing.

Can I monetize an SBLC immediately?

Only where a regulated lender agrees to accept it as collateral within a documented facility. Anything else is noise.

Do you work under ISP98?

Yes. ISP98 is our default for standbys. We align wording to the contract and issuer policy.

Can you add confirmation?

Yes. Where the beneficiary requires local bank risk, we arrange confirmation with approved counterparties.

Request Indicative Terms

Share your EPC contract, exposure, and timeline. We will revert with a bankable structure, draft wording, collateral options, and a closing plan.

Contact Us