How a letter of credit works
A letter of credit isn't actual money, and it's not a credit line, but it is a promise to pay. It guarantees that the recipient of the letter will be paid by someone in the chain, which can make international trade a lot easier.
For example, if Bob is ordering widgets from a company in Japan for the first time, he might send a letter of credit with his order, knowing it can take a few days (or longer) for his actual payment to appear in the company's accounts. The letter gets the ball rolling, so to speak, and the order is fulfilled while the payment is in process.