SE: Structured LCs have emerged as a variant of Traditional LCs in the last 25 years. Their development came in three phases. In the first phase, a large commodity trader was approached by its bank with a novel way to use the GSM-102 program offered by the Commodity Credit Corporation of the US Department of Agriculture (the “CCC”) which supported the export of US bulk agricultural products.  The bank told the commodity trader that, instead of selling directly to the foreign buyer, it should set up a subsidiary in countries where it had large bulk sales and sell to it, thereby allowing the subsidiary to be the applicant on the CCC LC. The credit on the LC application was covered by a commodity trade standby letter of credit. Since the subsidiary would not need a loan from the foreign bank it could immediately prepay its obligation from the proceeds of the sight sale to the end buyer at a discount. The commodity trader could use the discount (basically a fee charged to the Issuing Bank for access to cheap funding under the CCC program) as a way to buy down the cost basis on the underlying commodities. In most cases, this allowed the commodity trader to offer more competitive pricing and thus gain market share. They used to refer to it as a “margin stretcher”. This structure also established the two basic steps in almost all structured transactions: to sell on a term basis to an entity (usually a related party) to set up the debt obligation and then prepay that obligation at a discount with the proceeds of the sight sale. In the 1990s, commodity traders started to adapt this CCC structure to commodity exports in a variety of geographical areas. The next structure created was called a Corporate Transit Trade and placed a company in the middle of an existing trading pattern to obtain working capital financing. A commodity trader would sell to a company on 180-day terms which would either sell it back to the commodity trader or on-sell to a related party at sight. These were done while the goods from the original transaction were in transit on the high seas. These were then sold to banks as trade transactions related to the commodity trader under silent funded participation.