Defined in the UCC as a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance; the term does not include the right of a beneficiary to demand payment or performance under a letter of credit (UCC § 9-102(a)(51)).

This means that a letter-of-credit right is the right to receive payment from the issuing bank when and if the beneficiary makes a drawing under the letter of credit. It does not, however, include the right to actually draw under the letter of credit. The distinction is similar to the difference between an assignment of the proceeds of a letter of credit and a transfer of the letter of credit. Although a letter-of-credit right is a right to receive proceeds in the future, it nevertheless constitutes a present asset over which a debtor can grant a security interest under Article 9 of the UCC.