30 day bankers acceptance rates
A banker’s acceptance is a method of financing that banks can use to provide their customers with short-term (six months or shorter) financing for trade transactions. Acceptances may be less expensive than more traditional trade financing methods. A banker’s acceptance is a time draft drawn on, and accepted by a bank. By accepting the draft, the bank indicates its commitment to pay the stated amount of the draft on a specified future date. The draft may then be sold to an investor for a money market rate of return based on the credit risk of the bank. The bank also anticipates that the rediscount rate would be equal or better than the rate quoted. Thus, bankers’ 30 day bankers acceptance rates acceptances enable a bank to close the finance loop by receiving immediate funding.
The bankers acceptances described here are interesting in that they are among the few financial vehicles whose primary purpose is not to raise money for something. Rather, it is a vehicle to inspire trust between two unfamiliar companies across borders. The bank, here, acts as the guarantor of the transaction.