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5 - SBLC

 Most Common Real-World Uses in International Trade

Trade Scenario
Instrument Usually Required
Why It’s Used
Typical Face Value
Duration
Commodity deals (oil, metals, grains, sugar)
SBLC MT-760
Seller wants 100% payment protection before shipping
100% of contract value or 100% + 10%
1 year + 1 day (or revolving)
Pre-export finance / advance payment
BG (Advance Payment Guarantee)
Buyer pays 10-50% upfront; wants money back if seller never ships
Equal to advance amount
Until shipment + grace period
Construction / infrastructure projects abroad
Performance BG (usually 5-10% of contract) + Advance Payment BG
Protects owner against non-completion or misuse of mobilizations funds
5-15% of total contract
Until project completion or handover
Tender/Bid bond
Bid Bond BG (1-5%)
Ensures bidder will sign contract if awarded
1-5% of tender value
Until contract award
Large machinery / capital goods export
SBLC or Deferred Payment BG
Buyer pays over 1-5 years; seller wants bank guarantee instead of LC
100% of deferred amount
Matches repayment schedule

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