Back-to-Back Loan


Back-to-Back Loan
A loan in which two companies in different countries borrow offsetting amounts from one another in each other's currency. The purpose of this transaction is to hedge against currency fluctuations. With the advent of currency swaps this type of transaction is no longer used very often.

In a back-to-back loan, a U.S. company would loan US$1000 to a U.K. company in the U.S., and the U.K. company would loan an equivalent amount (at spot exchange rates) in sterling to the U.S. firm in the U.K. Both companies get the currency needed without going to the forex market.


Investment dictionary. . 2012.

Look at other dictionaries:

  • back-to-back — s.m.inv. ES ingl. {{wmetafile0}} TS econ. operazione finanziaria con la quale una società costituisce un deposito presso una banca come garanzia di un finanziamento di uguale entità che la banca stessa assegnerà a un beneficiario indicato dalla… …   Dizionario italiano

  • Back-to-Back Commitment — A commitment to make a second take out loan that piggybacks another loan. With a back to back commitment, once the terms of the first loan are satisfied, it will be rolled into the second loan. The best example of a back to back commitment is… …   Investment dictionary

  • 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. The New York Times Financial Glossary * * * back to back loan back to back loan …   Financial and business terms

  • 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. Bloomberg Financial Dictionary * * * back to back loan back to back loan ➔… …   Financial and business terms

  • back-to-back loan — /ˌbæk tə bæk ləυn/ noun a loan from one company to another in one currency arranged against a loan from the second company to the first in another currency. Also called parallel loan (NOTE: Back to back loans are (used by international companies… …   Dictionary of banking and finance

  • back-to-back loan — One loan of a matching pair of loans in different currencies: A lends to B and B lends to A where the loans are of the same value. The back to back loan was a precurser of the currency swap and can be used to avoid currency restrictions …   Big dictionary of business and management

  • back-to-back loan — /bæk tə ˈbæk loʊn/ (say bak tuh bak lohn) noun an arrangement whereby two parties agree to offset a loan in the currency of one country against a loan in another country s currency …   Australian English dictionary

  • Back-to-back Loans —    Arrangement whereby a loan in one currency is set against a loan in another currency. It can be used to avoid or overcome exchange risks and exchange controls. Also known as parallel loans …   Financial and business terms

  • Back-to-back financing — An intercompany loan channeled through a bank. The New York Times Financial Glossary …   Financial and business terms

  • back-to-back financing — An intercompany loan channeled through a bank. Bloomberg Financial Dictionary …   Financial and business terms


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