Can Structured LCs Help Bridge the Trade Finance Gap in the East African Region?
On May 12, 2021, Simon Cook joined a panel to discuss "Can Structured LCs Help Bridge the Trade Finance Gap in the East African Region?" at the East Africa 2021 Virtual Conference sponsored by GTR.
Structured or "synthetic" Letters of Credit continue to play a crucial role in channeling USD liquidity into East Africa’s local banking sector. However the structure’s status as a bona fide trade finance instrument can prove contentious amongst the market’s purists.
The panel shed light on the operational aspects of a synthetic LC and the motivations of various deal participants, highlight the advantages the structure affords to East Africa’s trade sector, and seek to address questions around the legal treatment of synthetic LCs in the event of default.