parallel loan

Parallel loan

A process whereby two companies in different countries borrow each other's currency for a specific period of time, and repay the other's currency at an agreed maturity for the purpose of reducing foreign exchange risk. Also referred to as back-to-back loans.

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.

parallel loan


parallel loan

References in periodicals archive ?
It will provide Coopenae up to $15 million and mobilize a parallel loan of up to $15 million, from the Netherlands Development institution FMO.
According to Hatano, a parallel loan from the Extended Fund Facility of the International Monetary Fund totaling 150 billion yen will be used to support economic rehabilitation and structural adjustments in the Indonesian economy, which was seriously affected by the Asian economic crisis.
Fitch maintains a parallel loan delinquency index that tracks only loans within seasoned transactions - those that have been securitized for at least one year.
9 million euro long-term loan from the European Bank for Reconstruction and Development ("EBRD") and a parallel loan of 1.
The European Investment Bank (EIB) is also providing a parallel loan of $120.
The proposed IFC investment will comprise is a US$45 million A loan for IFC s own account, and a $105 million of mobilization through a B Loan, Parallel Loan and/or Guarantees.
1 million from UniCredit through a syndication loan, while OPIC provided a $50 million parallel loan.
Employees at the facility will perform parallel loan processing and collateral functions, deposit account and transaction processing, research and reconcilement, customer service, information systems help desk and desktop support, and systems administration functions.
The Project is intended to be co-financed by International Finance Corporation that would provide a parallel loan in the amount of up to US$ 37.
The agreement contemplates the signing of two parallel loan agreements with another multilateral institution and a government owned financial institution that would increase the aggregate size of the available financing to $230 million and would permit its use for medium-term funding.

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