A negotiation credit is the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.¹⁾

In a negotiation credit scenario, the nominated bank (a bank appointed by the issuing bank to handle the LC transaction) purchases drafts (documents representing the amount to be paid) and/or documents from the beneficiary.