Standby Letter Of Credit

It really seems too good to be true.
A company in Germany, may issue a credit to another company waiting in Hong Kong.
The amount may range from 5 million euros to 100 million euros.
Can someone clarify?

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Please note that there is a difference between a letter of credit and a letter of credit. What you are probably referring to the terms of international trade is a letter of credit.

I do not understand why it is "too good to be true." Loans can be made internationally. It happens every day. A letter of credit is simply a commitment to a loan. The main use of SLOC is also a guarantee of performance. If I hire a company to construct a building and before them the money to buy equipment, I want to know the building will be constructed. If the company I hired bankruptcy, SLOC will pay for me to hire a second company to complete construction without me pay again for what I have already paid the first business. It is a form of insurance. The company that wants my business gets commitment and pays a fee as a condition to get my business.