Direct Pay Standby Letters of Credit

Harness the power of M&T Bank's credit rating. 

Your Cash Alternative

Direct Pay Standby Letters of Credit are hybrid financial vehicles that are typically associated with taxable or tax-exempt bond-financed projects. These Letters of Credit allow you to utilize the credit rating of M&T (the issuing bank), as well as actually make payments to the trustee responsible to bondholders.

In structures that utilize Direct Pay Letters of Credit, the Letter of Credit may be drawn upon by the fiduciary – such as a bond trustee – without first relying on funds provided by the client.

​​Provides Investor Confidence

Potential investors or parties to a business transaction react positively not only to the issue of a Letter of Credit, but also to the credit rating of the bank providing this credit enhancement.

Variable or Fixed-Rate Options

There are three major types of tax-exempt bonds that Direct Pay Letters of Credit back. The bonds differ by variable or fixed-rate and their maturity:

  • Seven-Day Low Floaters
  • One-Year Floaters
  • One-Year Term


Cost-effective credit enhancement is the most important requirement for a Letter of Credit bid to be accepted by a Letter of Credit prospect.

Getting Started

To get started, call your M&T Relationship Manager or our International Trade Finance Group to obtain credit approval and complete the necessary legal documentation. 

​All products and services are subject to eligibility and restrictions may apply.