A letter of guarantee refers to a written document issued by a bank, acting as the guarantor, at the request of a corporate client, in which the bank promises to perform relevant payment obligations to the beneficiary in accordance with the terms specified in the letter.

Letter of guarantee is one of the most effective and simple bank credit enhancement products in domestic and transnational commercial transactions. It is widely used in contracting projects, labor and technical cooperation, goods trading, shipbuilding, equipment leasing, tariff payments, transportation, insurance, project investment, corporate mergers and acquisitions, bond issuance, loan financing, litigation preservation and other economic fields.