KRS 355.5-118: Security interest of issuer or nominated person.

(1) An issuer or nominated person has a security interest in a document presented under

a letter of credit to the extent that the issuer or nominated person honors or gives

value for the presentation.

(2) So long as and to the extent that an issuer or nominate d person has not been

reimbursed or has not otherwise recovered the value given with respect to a security

interest in a document under subsection (1) of this section, the security interest

continues and is subject to Article 9 of this chapter, but:

(a) A security agreement is not necessary to make the security interest enforceable

under KRS 355.9-203(2)(c);

(b) If the document is presented in a medium other than a written or other tangible

medium, the security interest is perfected; and

(c) If the document is presented in a written or other tangible medium and is not a

certificated security, chattel paper, a document of title, an instrument, or a

letter of credit, the security interest is perfected and has priority over a

conflicting security interest in th e document so long as the debtor does not

have possession of the document.