back-to-back loan

(redirected from Back-to-Back Loans)

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 ?
On September 26,2014, TEI President Mark C, Silbiger submitted a letter to the Canadian Department of Finance setting forth the Institute's recommended revisions to August 29, 2014, draft legislation that will restrict back-to-back loans made through intermediaries.
But if the Department knew Anglo was dressing up back-to-back loans from other banks as deposits to mislead markets that is very different.
Identify S corporations with basis limitation issues as soon as possible to emphasize to shareholders the importance of structuring S corporation loans as coming directly from shareholders and to minimize last-minute recharacterization of advances from related entities as back-to-back loans from shareholders.
A financing arrangement would include back-to-back loans.
S corporation shareholders have attempted to minimize this constraint and increase their loss limitations by creative characterizations of debt structures that often include variations of shareholder-level guarantees, indirect shareholder loans, or back-to-back loans.
As a result, many lenders prefer back-to-back loans.
On behalf of Tax Executives Institute (TEI), I am writing to express our comments and concerns about the Government's proposals relating to treaty shopping and certain back-to-back loans.
Nevertheless, the IRS has successfully attacked back-to-back loans in certain circumstances.
He said: "We've already heard about the extent to which this bank gave loans to its own directors, how it gave loans to other people to buy shares in the same bank and arranged back-to-back loans with another financial institution to make its financial position look healthy at a time when it was anything but.
The Ruckriegels argued that the payments were in substance back-to-back loans through them that had created a debtor-creditor relationship.
Excluding the non-recurring reorganization charges and the interest expense associated with the back-to-back loans the company had received for operations in Venezuela, the company had an EBITDA-to-interest expense ratio of 3.