Contingent guarantees sold by an FI to underwrite a trade or commercial performance of the buyer of the guarantee are:

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Contingent guarantees sold by an FI to underwrite a trade or commercial performance of the buyer of the guarantee are known as documentary letters of credit. These guarantees are commonly used in international trade transactions to mitigate the risks associated with buying and selling goods across borders. The FI provides a guarantee to the seller that they will receive payment for the goods, as long as they comply with the terms of the letter of credit.

Contingent Guarantees Sold by an FI to Underwrite a Trade