MT 760 Explained: Guarantee / Standby Letter of Credit

MT 760 issues a bank guarantee or standby Letter of Credit — a promise to pay the beneficiary if the applicant fails to perform an obligation, rather than the primary payment mechanism for the underlying deal itself. That's the key difference from a documentary LC: a standby is meant to sit unused as a safety net, only drawn on if something goes wrong, whereas a documentary credit under MT 700 is the expected payment route.

Key fields

• 20 — Sender's Reference: Reference for this guarantee.
• 23 — Further Identification: States whether this message is issuing the guarantee directly, or advising one issued elsewhere.
• 22A — Type of Undertaking: What kind of guarantee this is — bid bond, performance guarantee, advance payment guarantee, standby LC, and so on.
• 50 — Applicant: Whose performance is being guaranteed.
• 59 — Beneficiary: Who can claim under the guarantee if the applicant fails to perform.
• 32B — Currency/Amount: The maximum the guarantee will pay out.
• 23B — Expiry Details: When the guarantee's validity ends.
• 77C / 77U — Text of the Undertaking: The actual wording of what the bank is promising — the operative substance of the guarantee.

Claims under a standby or guarantee are typically triggered by a simple demand statement from the beneficiary, not by presenting shipping documents — a much lighter bar than a documentary credit, which is exactly why applicants only want it drawn as a last resort.