What is an assignment of proceeds under a letter of credit?
An assignment of proceeds under a letter of credit is the allocation of a portion of the payment available under a letter of credit to a party other than the letter of credit beneficiary. The assignment is typically arranged by the letter of credit beneficiary through the advising/confirming bank, as appropriate. The party to which the assignment is made (assignee) is assured of payment under the letter of credit if and when the letter of credit is successfully negotiated. The assignee does not, however, receive any rights or protection under the letter of credit.
