.png)
Letter of Credit in Trade Finance: How a 2025 Cross-Border Deal Connected China, Singapore and Saudi Arabia
- Manyi Kiss
- Dec 26, 2025
- 3 min read
In 2025, while global trade routes were being reshaped by geopolitical tension and tighter banking credit, one instrument quietly remained at the center of international commerce: the letter of credit.
This is the story of how a Singapore-based import–export group continued to move goods from China to Saudi Arabia, despite mounting payment risk and shrinking bank appetite — thanks to a structured letter of credit trade finance solution designed by Credit Glorious.
A Trade Flow Under Pressure
The trading group operated as a hub between Chinese manufacturers and Saudi buyers, managing high-volume shipments across Asia and the Middle East.
On paper, the business was solid. In practice, it faced a familiar 2025 problem:
Chinese suppliers demanded stronger payment guarantees.
Saudi buyers requested extended payment terms.
Traditional bank letter of credit lines were fully utilized.
Cross-border risk made new credit approvals slow and uncertain.
Without intervention, shipments would have slowed — or stopped altogether.
Letter of Credit Structure in a China–Singapore–Saudi Arabia Trade Flow
Rather than relying on a standard banking solution, Credit Glorious structured a bespoke letter of credit framework, aligned with the real economics of the trade flow.
The solution combined:
Irrevocable documentary letter of credit governed by UCP 600 (the global standard for documentary credits).
Usance letter of credit to accommodate deferred payment from Saudi buyers.
Structured confirmation mechanisms to mitigate country and counterparty risk.
Payment flows tied strictly to verified shipping documentation.
This transformed the letter of credit from a simple payment tool into a strategic trade finance instrument.
Why the Letter of Credit Was the Turning Point
In this operation, the letter of credit was not just a guarantee — it was the hinge on which the entire transaction turned.
By redesigning the LC structure, Credit Glorious enabled:
Immediate payment security for Chinese exporters.
Working capital relief for the Singapore trading group.
Deferred settlement for Saudi counterparties.
A fully self-liquidating trade finance cycle.
The result was continuity, scalability, and renewed commercial confidence.
Credit Glorious’ Role in the Letter of Credit Transaction
Credit Glorious acted as structurer and execution partner, not as a passive intermediary.
Its role included:
Engineering the letter of credit structure.
Aligning commercial contracts with LC mechanics.
Facilitating capital deployment against LC-backed trade flows.
Ensuring execution across multiple jurisdictions.
By focusing on structure rather than balance-sheet lending, the transaction avoided additional bank leverage while remaining fully compliant and bankable.
Letter of Credit Definition: Beyond the Textbook
Technically, a letter of credit is an irrevocable undertaking guaranteeing payment upon presentation of compliant documents.
In modern trade finance, however, the letter of credit definition is broader. A well-structured letter of credit:
Redistributes risk across the supply chain.
Unlocks liquidity without stressing balance sheets.
Enables trade where traditional credit falls short.
This is why letters of credit remain indispensable in global trade in 2025.
The Outcome: Trade Continued, Relationships Strengthened
Thanks to the structured letter of credit trade finance solution, the operation achieved:
Uninterrupted shipments from China to Saudi Arabia.
Stabilized supplier relationships.
Improved negotiating leverage with buyers.
A repeatable framework for future trade routes.
What could have become a bottleneck turned into a competitive advantage.
Frequently Asked Questions About Letter of Credit in Trade Finance
What is a letter of credit in trade finance?
A letter of credit is a payment instrument that guarantees exporters are paid once contractual and documentary conditions are met, drastically reducing counterparty risk in international trade.
Why use a letter of credit instead of open account terms?
Letters of credit provide payment security, especially in cross-border transactions involving different legal systems, currencies, and risk profiles where open accounts are too risky.
What is a usance letter of credit?
A usance letter of credit allows deferred payment, enabling buyers to settle the payment after shipment (e.g., 90 or 120 days), while sellers maintain payment certainty.
Are letters of credit still relevant in 2025?
Yes. In an environment of tighter bank credit and higher geopolitical risk, structured letters of credit are more relevant than ever for securing supply chains.
Letter of Credit and the Future of Trade Finance
As global trade becomes more complex, letters of credit are evolving from administrative tools into strategic financial instruments.
Credit Glorious supports import–export groups with advanced letter of credit structuring, enabling secure, scalable, and capital-efficient trade finance solutions.
If your trade operations involve complex cross-border flows and traditional banking solutions are no longer sufficient, a structured letter of credit may be the key to restoring liquidity and certainty.
Contact Credit Glorious works alongside trading groups, corporates, and counterparties to design letter of credit trade finance solutions built for today’s global markets.
Trade does not stop when credit tightens. It adapts — with the right structure.
