What are the risks for texas bonds

Assignment Help Business Management

Reference no: EM133926668

Assignment:

A middle-party, Texas Bonds, have approached their bank with a request for the issuance of demand guarantees to an end-buyer in Africa in respect of the sale of three machines for the total sales value of USD 2.8m. The machines are to be purchased by Texas Bonds for USD 2.184m from the manufacturer in South East Asia and shipped direct to Africa. Supply lead time is as follows:

• Machine 1 USD 0.654m to be shipped in month 4

• Machine 2 USD 0.846m to be shipped in month 5

• Machine 3 USD 1.300m to be shipped in month 7 The end-buyer in Africa is to pay Texas Bonds by export letter of credit, payable 750 days after the date of shipment. The manufacturer in South East Asia requires Texas Bonds to arrange the issuance of an import letter of credit in their favour, payable 45 days after the date of shipment. Texas Bonds have been able to negotiate an advance payment of 30% of the contract value from the end-buyer. The following demand guarantees are to be issued in favour of the end- buyer on contract signature:

• Advance payment guarantee USD 0.840m (30%) valid for 8 months

• Performance guarantee USD 0.280m (10%) valid for 12 months

• Warranty guarantee USD 0.280m valid for 24 months The bank of Texas Bonds wish to minimise their risk exposure on this transaction and therefore need to consider the best way of structuring the deal.

Questions:

1. What are the risks for Texas Bonds?

2. What are the options for Texas Bonds?

3. Develop terms of payment.

Reference no: EM133926668

Questions Cloud

How the genomics industries can create other markets : Which applications and other industries can adopt these 4 innovations? Explain how the 3D printing and genomics industries can create other markets?

What are unlawful activities under anti-money laundering act : What are the unlawful activities under the Anti-Money laundering Act? (Give examples in a paragraph form).

Do you have the right to demand equal prices : Go to a major retailer's U.S. website and also their website for a foreign country. Try to identify price differences between markets for the same products.

Is it possible for a employee to motivate a manager : Is it possible for a employee to motivate a manager? If so how?

What are the risks for texas bonds : What are the risks for Texas Bonds? What are the options for Texas Bonds? Develop terms of payment.

Explain top 5 non-financial factors : Explain your top 5 non-financial factors and top 5 financial factors that may influence your job satisfaction and company loyalty.

How data science arena can have a huge affect on business : The above are just a few examples of how the data science arena can have a huge affect on business.

Discuss emerging markets : Emerging markets provide a great context where such innovations can arise. Discuss emerging markets and how they can be a fruitful ground for innovation.

Which applies to all childrens education and care services : Which applies to all children's education and care services, makes it illegal 'to discriminate against a person's physical, mental or other disability'.

User Account

All Pages