Financial SBLCs are often used to back direct financial obligations such as commercial paper, tax-exempt securities, or the margin requirements of exchanges. For example, if the bank’s customer issues commercial paper supported by an SBLC, and the bank’s customer is unable to repay the commercial paper at maturity, the holder of the commercial paper may request the bank to make payment. Upon the receipt of the request, the bank would repay the holders of the commercial paper and account for the payment of the paper as a loan to the customer under the letter of credit. Because of this irrevocable commitment, the bank has, in effect, directly substituted its credit for that of its customer upon the issuance of the SBLC; consequently the SBLC has become a credit enhancement for the customer. (Federal Reserve-Commercial Bank Examination Manual)