General Electric (GE) and Deutsche Bank are incorporating letters of credit (L/Cs) in a collaboration that aims to deliver innovative risk and working capital solutions for large-scale projects.

Deutsche Bank and GE Aero Energy, a GE business that manufactures gas turbines and other power equipment, say the solutions are specifically aimed at complex projects in Africa, China and other emerging countries.

Unique combination

These transactions will be supported by a unique combination of traditional tradefinance and more progressive financial supply chain product offerings, according to the collaborators.

GE Aero Energy and Deutsche Bank have chosen to collaborate to cover GE Aero Energy's payment and documentary risk with the aim of accelerating payments and thereby improving working capital.

Structuring

The financing model involves the structuring of standby and documentary L/Cs, confirmations and transfers of such instruments.

With Deutsche Bank's guidance, GE Aero Energy prepares the shipping documents required for payment under the L/Cs.

The collaborators say that where unavoidable discrepancies in documentary presentation occur, Deutsche Bank then provides GE Aero Energy with an accounts receivable purchase linked to the underlying L/C.

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