back-to-back loan

Back-to-back loan

A loan in which two companies in separate countries borrow each other's currency for a specific time period and repay the other's currency at an agreed-upon maturity.

Back-to-Back Loan

A situation in which two companies in different countries borrow an equivalent amount from each other in their respective currencies. That is, there is no net capital output because the companies are borrowing the same amount, only in different currencies. The companies repay these loans in an agreed-upon period of time. This used to be a common way to hedge against currency fluctuations, though currency swaps have largely replaced them.

back-to-back loan

or

parallel loan

an arrangement under which two companies in different countries borrow each other's currency and agree to repay the loans at a specified future date. At the expiry date of the loans each company receives the full amount of its loan in its domestic currency without risk of losses from exchange-rate changes. In this way back-to-back loans serve to minimize EXCHANGE RATE EXPOSURE.

back-to-back loan

or

parallel loan

an arrangement under which two companies in different countries borrow each other's currency and agree to repay the loans at a specified future date. At the expiry date of the loans, each company receives the full amount of its loan in its domestic currency without risk of losses from exchange-rate changes. In this way back-to-back loans serve to minimize EXCHANGE-RATE EXPOSURE.
References in periodicals archive ?
Although courts carefully scrutinize back-to-back loan transactions, a taxpayer will be allowed to increase his or her debt basis for such a transaction if it is properly executed and documented.
Bertie Ahern's response to Des O'Neill's suggestion that he entered into a back-to-back loan agreement with AIB in December 1993.
Congress intended the provision to apply not only to back-to-back loan transactions, but also to multiple-party transactions involving debt guarantees or equity investments.
Interest expenses in 1995 were ($6,117) million compared to ($3,478) million in 1994 due to the back-to-back loan for the repurchase of the leaseback operation.
The earlier decisions were very taxpayer-favorable, indicating that the Tax Court had changed its attitude on back-to-back loan restructuring between related entities.
This resembles the back-to-back loan situation discussed previously, except that in Bhatia, there was no third-party lender.
As a practical matter, the "dominion and control test" arguably may never be met in back-to-back loan arrangements.
On behalf of Tax Executives Institute (TEI), I am writing to express our comments and concerns about the revised proposals relating to back-to-back loan arrangements through intermediaries (hereinafter "the Proposals").
Roman Abramovich's policy of signing new players every season - instead of promoting any junior level players - has seen highly rated youth products, such as Josh McEachran and Jeffrey Bruma, going away on back-to-back loan spells, despite proving themselves at Stamford Bridge.
5billion back-to-back loan from Irish Life & Permanent to Anglo - a move which made the bank's balance sheets look better than they were.
5billion back-to-back loan from a rival to boost its balance sheet for year end accounts.