Section 5--117. Subrogation of issuer, applicant, and nominated person.

(a) An issuer that honors a beneficiary's presentation is subrogated
to the rights of the beneficiary to the same extent as if the issuer
were a secondary obligor of the underlying obligation owed to the
beneficiary and of the applicant to the same extent as if the issuer
were the secondary obligor of the underlying obligation owed to the
applicant.

(b) An applicant that reimburses an issuer is subrogated to the rights
of the issuer against any beneficiary, presenter, or nominated person to
the same extent as if the applicant were the secondary obligor of the
obligations owed to the issuer and has the rights of subrogation of the
issuer to the rights of the beneficiary stated in subsection (a) of this
section.

(c) A nominated person who pays or gives value against a draft or
demand presented under a letter of credit is subrogated to the rights
of:

(1) the issuer against the applicant to the same extent as if the

nominated person were a secondary obligor of the obligation

owed to the issuer by the applicant;

(2) the beneficiary to the same extent as if the nominated person

were a secondary obligor of the underlying obligation owed to

the beneficiary; and

(3) the applicant to the same extent as if the nominated person

were a secondary obligor of the underlying obligation owed to

the applicant.

(d) Notwithstanding any agreement or term to the contrary, the rights
of subrogation stated in subsections (a) and (b) of this section do not
arise until the issuer honors the letter of credit or otherwise pays and
the rights in subsection (c) of this section do not arise until the
nominated person pays or otherwise gives value. Until then, the issuer,
nominated person, and the applicant do not derive under this section
present or prospective rights forming the basis of a claim, defense, or
excuse.