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What is the best response to “we will monetise your SBLC”?
“Monetisation” Translated into Real Products
Learn to ask what financing product is actually being proposed.
Why the word is vague
“Monetisation” is widely used in the market but can hide very different structures. A professional analysis asks what actual legal financing is occurring.
Possible meanings
It may mean a loan secured by an undertaking, discounting a future payment, purchase of receivables, forfaiting, collateralised credit or another financing arrangement.
Questions to ask
Who advances the money? What is being purchased or pledged? Who repays? What happens on default? What recourse exists? What bank must pay, and under what documents?
Red flag
If nobody can explain the real financing product but promises fixed huge returns from “monetising” an instrument, treat the proposal as high-risk and verify independently.
Remember thisDo not stop at “monetisation.” Identify the actual loan, purchase, discount or security structure underneath the word.
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