Hold for Value - Financial Guarantees

Hold for Value - Financial Guarantees

Hold for Value – What Does It Mean?

Hold for value requests, also known as ‘extend or hold for value’ or ‘pay or hold for value’, allow the beneficiary to avoid making a drawing on the guarantee or counter guarantee, serving the purpose of extending the guarantee. According to one expert, this type of request “is to be deemed a demand for payment, although at a future date” while another views it is “for all practical purposes, not a demand for payment, but a request for extension.”

Similar to “Extend or Pay”

How should hold for value requests be treated? For practical purposes, one approach is that these requests should be treated in much the same way as ‘extend or pay’ requests as the beneficiary does not seek payment at the time, but wishes to avoid the lapse of the guarantee.

For more information on Hold for Value requests, see the upcoming October issue of Documentary Credit World. Not yet a subscriber to DCW? Click here to learn more about the trade finance industry’s longest running monthly publication.

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