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

see BACK-TO-BACK LOAN.

parallel loan

see BACK-TO-BACK LOAN.
References in periodicals archive ?
The EBRD and Citadele Bank Lithuania are supporting the expansion and modernisation of Lithuanias furniture supplier Vilniaus Baldai with a parallel loan of 37 million.
Back then, of course, there was also a parallel loan recovery drive under way since most banks were public-sector entities and weighed down by non-performing loans.
A parallel loan of 5 million will be provided by the Nordic Environment Finance Corporation (NEFCO).
The mobilised amount includes a B Loan from Arab Bank, a loan through the IFC Managed Co-Lending Portfolio Programme, a new syndications platform that offers institutional investors the ability to passively participate in IFC's future senior loan portfolio, and a parallel loan from DEG and Finnfund.
The financing package includes a $54mn loan from the IFC and $134 million from other senior lenders, including a parallel loan from Japan International Cooperation Agency (JICA) , IFC said in a statement.
Announcing the deal, alfanar said the EBRD loan will be complemented by a parallel loan of up to $28.5 million provided by the ICD.
In addition, IFC said it is mobilizing a USD4 million parallel loan from the Inter-American Development Bank.
How can they lend when the borrower has a parallel loan?" underlined the Chairman of the National Bank.
IFC offered EUR46.1m and mobilised an additional EUR41.1m from UniCredit through a syndication loan, while OPIC provided a USD50m parallel loan.
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.
One such strategy, the parallel loan, was the precursor of the booming 1980s market in interest rate and currency swaps.

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