Letters of guarantee are used in importing and exporting, commercial contracts, margin trades, major purchases, real estate investments, mergers and acquisitions, and other significant financial ...

Letters of credit are legal instruments providing a financial guarantee. They assure a beneficiary that payments will be made or nonfinancial obligations performed by a seller or provider.

A bank guarantee and a letter of credit are both promises from a financial institution that a borrower will be able to repay a debt to another party, no matter the debtor's financial circumstances.