Back to back L/C is two letter of credit that used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.
Like most LCs, this is used primarily in international transactions, with the first
LC serving as collateral for the second.