FINANCIAL INSTRUMENTS

Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt (bonds, loans); equity (shares); or derivatives (options, futures, forwards).

Financial instruments may be categorized by "asset class" depending on whether they are equity-based (reflecting ownership of the issuing entity) or debt-based (reflecting a loan the investor has made to the issuing entity). If the instrument is debt it can be further categorized into short-term (less than one year) or long-term. Foreign exchange instruments and transactions are neither debt- nor equity-based and belong in their own category.

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SBLC

Stand By Letter of Credit

Simply involves converting a bank instrument (Bank Guarantee or Standby Letter of Credit) into liquid cash/legal tender mainly for purpose of project funding. The requirement for any bank instrument to be monetized remains that such Standby Letter of credit or Bank Guarantee must be issued by a well rated bank.

MTN

Mid Term Note

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Bank Guarantee

A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan. The guarantee lets a company buy what it otherwise could not, helping business growth and promoting entrepreneurial activity. There are different kinds of bank guarantees, including direct and indirect guarantees.

LC

Letter of Credit

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