Are standby letter of credits transferable?
Assignment of Standby letter of credit proceeds -The beneficiary can
assign the proceeds of a standby letter of credit. But this assignment
does not assign the rights of the beneficiary as “drawer” on the
standby letter of credit, and only the beneficiary may exercise the
“drawer” rights and present the demand for payment under the terms
of the standby letter of credit unless the terms of the instrument
provide otherwise. This means that the assignee may receive the
proceeds of the standby, but in order to obtain those proceeds the
beneficiary must first make the demand for payment. This also means
that the beneficiary can sell by assignment, at discount, the benefits of
the standby. An assignment of proceeds requires notice to the issuing
bank of this action; otherwise the issuing bank would pay the
beneficiary rather than the assignee.
Transfer of Standby letter of credits. Standby letter of credits can be
transferred to a third party ONLY with the written consent of the
issuing bank AND the beneficiary.