A back-to-back letter of credit is actually two letters of credit used as a financing device.

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A back-to-back letter of credit involves two separate letters of credit, one issued by the buyer's bank and the other by the seller's bank, as a means of providing financing for a specific transaction. The first letter of credit serves as collateral for the second letter of credit, which is issued to the seller to pay for goods or services provided to the buyer. This financing technique is commonly used in international trade transactions.

A Back-To-Back Letter of Credit Is Actually Two Letters of Credit