A Swiss commodity trading company has secured a structured buy-and-sell agreement for Jet Fuel and is seeking a financial partner to facilitate trade execution. The partner will be required to issue a Standby Letter of Credit (SBLC) to enable transactions and, in return, will receive a fixed profit of $1.15 per barrel traded. The Swiss company will handle all operational aspects, ensuring a seamless process.
Trade Structure & Financial Requirements
Trade Volumes & Timeline
- Month 1: Trial shipment of 1 million barrels
- Month 2: Increased volume of 2 million barrels
- Month 3 Onward: 6 million barrels per month (delivered as 2 million barrels every 10 days)
SBLC Requirements
- Month 1: $82 million
- Month 2 & Beyond: $164 million
The SBLC is a financial guarantee that secures the purchase and delivery of the jet fuel. The Swiss company currently lacks sufficient collateral to issue this on its own bank account and requires a financial partner to provide the SBLC.
Investment Opportunity & Partner’s Role
- The partner provides the SBLC to enable the transaction.
- The Swiss company handles all trade operations, including logistics and execution.
- The financial partner receives $1.15 per barrel traded, which covers their SBLC cost and secures their profit.
- A joint bank account under the Swiss company will be used to process transactions:
- The buyer deposits funds into this account.
- The seller receives payments from this account.
- This ensures transparent fund flow and security for all parties.
Revenue Potential for the Partner
- Month 1: 1 million barrels → $1.15M revenue
- Month 2: 2 million barrels → $2.3M revenue
- Month 3 & Beyond: 6 million barrels per month → $6.9M per month
With sustained trade, the financial partner can expect consistent and growing returns from this structured agreement.
Profitability Scenarios & SBLC Cost Analysis
SBLC Cost Norms
- Minimalny koszt: 1% per annum
- Average Cost: 1.5% per annum
- High Cost: 2% – 3% per annum
Monthly Profitability Breakdown Based on SBLC Cost
| SBLC Cost (%) | Monthly SBLC Cost (USD) | Net Profit (USD) |
|---|---|---|
| 1.0% | $136,667 | $6.9M |
| 1.5% | $205,000 | $6.9M |
| 2.0% | $273,333 | $6.9M |
| 3.0% | $410,000 | $6.9M |
- Even at higher SBLC costs (3%), the deal remains highly profitable.
- The SBLC cost is an ongoing requirement, as the trade is continuous.
- The profitability margin per barrel ($1.15) allows for consistent returns despite varying SBLC costs.
Risk Mitigation & Security Measures
- Transparent Fund Flow – The use of a joint bank account ensures that funds are managed securely, reducing counterparty risk.
- Fixed Profit Structure – The financial partner earns a guaranteed margin per barrel, independent of market fluctuations.
- Managed Operations – The Swiss company is responsible for all trade logistics, eliminating operational burdens for the partner.
- Strategic Long-Term Potential – Given the scalability of the deal, the partnership can extend beyond the initial volumes, increasing profitabili
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