Many Uses U.S. exporters are likely to encounter veksels in a variety of commercial situations. In a forfaiting transaction, a bank or specialized forfaiting house issues an aval, or guarantee, on the note and pays the seller for their goods. The bank or forfaiting house then either keeps the note or resells it, with the final owner assuming responsibility for collection. A decision has not yet been made, pending final review of Russian legislation and business practices regarding promissory notes. The program already supports U.S. agricultural exports to 30 countries around the world.
Promissory notes have a variety of other uses, as well.
Larger Russian companies and their banks use notes as an instrument for structured corporate finance. Very large entities, like Gazprom and the state railways, will often issue notes redeemable in goods or services to pay their domestic creditors. Notes such as these, which are used to structure debt between large Russian corporations, are what fuel the secondary market, but will rarely be encountered by U.S. exporters. Risks Managing the legal and commercial risk inherent in promissory notes is the key to using them safely and successfully in Russia. The use of an experienced bank with extensive domestic correspondent relationships is important in evaluating an unfamiliar issuer.