Documentary Letter of Credit

An instrument issued by Citi^® in favor of a beneficiary (exporter) and on behalf of the applicant (importer). Citi commits to the payment of the transaction, provided that the exporter complies with the terms stipulated in the Letter of Credit.

Advantages:

The importer is assured that payment will only be made only if the exporter complies with the terms and specifications stated in the L/C (quantity, statements, documents, terms, etc).
Is particularly useful in those cases in which both importer and exporter do not know each other well, or it is a new relationship.
The importer can improve his negotiating power by having Citi commit to the payment.
In many cases is required by the exporter in order to eliminate sovereign risk of the importer’s country through confirmation.