fronting bank

fronting bank
England, Wales
In the context of syndicated credit facilities, a lender which issues a letter of credit, bond or guarantee on behalf of the lenders in the syndicate. The fronting bank is directly liable to the beneficiary for the full amount of the letter of credit, bond or guarantee but is counter-indemnified by the syndicate lenders pro-rata to their participation in the relevant facility. The beneficiary does not have any direct payment rights against the syndicate lenders.
See also fronting fee

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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