MG Capital Group (MGCG) Crypto Consulting team hosts a rare mix of technical expertise, financial literacy as well as a proven track record of success in several industries. These skills and experiences are now applied to the ever-evolving blockchain landscape, allowing us to navigate through traditional barriers of entry with ease. These valuable insights are used to help us assist our clients in reaching all of their goals.

To obtain Deferred Purchase/Acquisitions SBLC the price is 115%, the client pays only 15% within 5 days and the balance 15 days before maturity, so he can utilize the SBLC during the year and renew for another year, the bank can give credit facility usually between LTV 75% – 85%, an interest rate of about 3%.

Example: obtain SBLC in the amount of $100 million, the price is 15% must be paid within 5 days after delivery of the swift MT760. then you need to submit the project/business to the credit committee of the bank, in order to get the credit request, in the end only the credit committee will approve the LTV 75% to 85%, assuming you get the maximum credit then the credit will be $ 85 million, most likely the interest rate about 3% on the $ 85 million. (When we deduct 15% already paid a payment of the SBLC, and receiving bank fees of about 2%, therefore, bank the remaining credit will be about $ 68 million to use.

With about 68M you need a wonderful trade business to create profits first to get to the obligation to pay the 100%.

The Value to use – $ 15 million + $ 2.55 million (interest of 85 million) + bank credit establishment fee + bank advice and receiving a fee of the SBLC, plus commissions between 1% up to 3%.

Obtain CPN program the price is 15%, these are non-bank funds, the bank needs to endorse the principal and interest/fees(15%), the bank fee for endorsement depends on the Client, usually between 0.5% up to 1%. (this one way to do leverage) 

Upon receiving the loan, the interest/fees(15%) as discount + 1% endorsement guarantee for 365 days (one year) renewable +  commission 1% up to 3%. (Most of the banks will take 25% of the loan amount and manage it to back the endorsement guarantee, However, there are situations where the bank will require 50% management, it all depends on the client business and Portfolio, moreover if the client having assets to support the endorsement guarantee. then the client will have more funds to use for his business).

(In this situation the client will have as the cash flow use is the highest).

A significant benefit for the CPN funding program.

When comparing a funding product SBLC vs CPN when paying the same 15% within 5 banking days it is obviously the benefit to the CPN funding program, first, the funds are non-bank therefore no need for a credit committee, second you get first the cash/loan then the bank will endorse it, better then monetize or discount because on monetize you need to send the collateral first, and the punch line is on optimal use of the cash net on both programs is about $ 68 million, however, on SBLC still has to pay back to the bank $ 85 million + interest on $ 85 million, on CPN all include in the transaction and more the bank pays yield on the funds used that 25 % or 50%.

A Guarantee is a distinct promise to pay and is not dependent on the principal obligation. The guarantor (the bank) may not raise any objections or defenses based on the underlying transaction. This means the guarantor pays upon the first written demand (claim) on the part of the beneficiary, i.e. on the presentation of the confirmation specified in the guarantee text and any required documents. The standard wording used by banks in individual cases either complies with the local legal framework or the policies of the International Chamber of Commerce (ICC). Uniform Rules for Demand Guarantees and Bank Guarantees (URDG 758), and Uniform Customs and Practice for Documentary Credits and Standby Letter of Credit (UCP 600). The URDG 758 and UCP 600, Their wording is based on the internationally recognized issued by the ICC.

This service designed for clients who want to funds their projects like export/import business, leverage equity funds, trade companies, Manufacturing companies, and more.  those securities issued to the clients can be obtained by several methods:

Types of Bank Guarantee

* Standby Letter of Credit (SBLC).

* Demand Guarantees (DG).

* Bank Guarantees (BG).

We, MG Capital obtain and issue the instruments from 15 Top Banks.

Obtaining a Licensing of the instruments. This bank instrument is full CASH BACKED as Collateral opened by the Provider for the benefit of the Beneficial(Client) or Monetizer.

*** Fifteen days before the maturity the Client can renew or return the bank paper-free, clean and clear without any lien.

*** if the clients bank don’t agree to issue the RWA/BCL, the client can deposit the fee’s in the Escrow IOLTA account.

Client’s Bank sends swift MT799 RWA to receive the said instrument.  

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Issuing Deferred Purchase/Acquisitions of instruments. This instrument is full CASH BACKED and comes with the Title Owner of the Beneficial(Client).

*** Fifteen days before maturity the client has three options: the first is to purchase the instrument, the second is to renew the instrument (total renews up to 3 years). In the event that the client does not purchase or renew the instrument, the bank endorses and return the bank paper-free, clean and clear without any lien.

In order to get a term sheet of obtaining Bank papers, the following documents need to be submitted for review and due diligence:

1. Application/Letter of Request.
2. KYC on Corporations letterhead.

Once the full package submitted, the M.G Capital Compliance to review, within about five business days, on green lite and decided to continue the process, the client accepts the offer of service, the procedure, and schedules for performance.

Procedures Outline:

1. The Provider responds with a delivery of a non-binding Term Sheet.
2. After the client reviewed the Term Sheet and shared with his bank, which must be signed and if possible stamped as “Acknowledgment” by the bank.
3. The process is a bank to bank basis (DVP settlement).

*** In heaven forbid which were allegedly forging documents or attempt of fraud, the company is obligated under law to notify the authorities, which could result in a criminal investigation as well as entry to the blacklist.

When leasing or purchasing a BG from a bank instrument provider, there will always be a fee involved. It is possible to set up an agreement whereby a Monetizer pays for the fee. This has to be made very clear in the agreements. The difference between the purchased and leased amount can be a substantial amount of money. However if using a Closed End Transaction (for project funding,) the fee can be taken care of within the transaction itself.

The same can hold true when looking for SBLC monetizers and traders. This is why where all possible if you find a ‘closed ended transaction’ whereby all service providers are already in agreement with each other as opposed to trying to source each service provider individually (open ended) this would be an advantage. Common pitfalls for applicants who do not understand how BG’s work:

1.) People don’t realize that one service (Provider) has to dovetail the other (Monetizer), eg; one party may not recognize the other. All of a sudden you have a bank instrument with no-one to go to to monetize and/or trade it, leaving yourself a hefty bill.
2.) The wording on the BG is not suitable for Monetization and designed specifically for commerce.
3.) Time left on the BG for Monetization.

Another case in point, Monetizers block the bank instruments when they go into trade. You can not physically pass on a leased instrument to trade with. The trader will not trade a bank instrument if they have not agreed to do so with the monetizer.

Bank Guarantee Security Methods
International bank guarantee providers, monetizers and traders all work in tandem with each other for the purpose of funding projects. Each part of the transaction process work as a whole by having pre-arranged agreements with one another. By having pre arranged agreements with Providers, Monetizers and Traders working in tandem with one another, will  this helps a great deal help towards minimizing risk during any part of the financial transaction. We call this a ‘close ended’ transaction.

Where all possible, safe guards have been put in place to ensure maximum protection of client’s money. (Issuance and mo netization of a bank guarantee.) For example; banks will adhere to ICC banking rules as well, will operate under the regulatory framework within the country the operate in. That and depending on what process we are utilizing, there may be insurance bonds put into place to protect client’s funds.

There are are many options when applying for a Bank Guarantee, whether you pay the SWIFT fee or not to levels of comfort you need that the Provider will perform. As with Closed End Transactions, it is the best way to manage the issuance and monetization of a Bank Guarantee. Additional layers of security are added to help streamline the process.

One security approach is to use a solicitor/lawyer service to put the fees into an escrow account (POF) working on behalf of the beneficiary approved by the Provider. The fees are not handed to the provider until a pre-advice MT799 has been delivered by SWIFT. Another approach is we align ourselves with an underwriter who is able to insure the capital. In other circumstances, if the Provider can not cannot perform, you will have an agreement in place that the fees will be returned. There’s always some kind of paper trail and it is standard practice that receivers will get a hard copy of the SBLC once all fees have been remitted. As a company we are not risk takers and therefore work with service providers who have done their utmost to put safety measures in place to minimize risk to the best of their ability.

Since 2013 the MG Capital Group (MGCG) LTN Team with help of its partners has evaluated and tested over a 100 different LTN Trade and/or Sale Programs (programas letras do tesouro nacional). Most of these programs were not worth the paper upon which they were written. As every bond owner knows, navigating the processes required to complete an LTN transaction is very complex and difficult. Recurring events such as inconsistent guidelines from the Central Bank of Brazil (BCB), untimely downgrading of Brazil's government debt by credit-rating agencies, turmoil in the financial markets related to AML legislation and BASEL III banking requirements have created an environment that required LTN programs to undergo restructuring, often multiple times. And when this is combined with unprofessional behavior from uninformed or less than ethical "online brokers," life in the LTN arena has been challenging.