text: Letters of Credit, a commercial letter of credit issued by a bank on behalf of the importer.  In the document, the bank agrees to honor a draft drawn on the importer, provided the bill of lading and other details are in order.  In essence, the bank substitutes its credit for that of the importer. Obviously, the local bank will not issue a letter of credit unless it feels the importer is creditworthy and will pay the draft.\n\nThe letter of credit arrangement almost eliminates the exporter's risk in selling goods to an unknown importer in another country.