Parallel Loan

A type of foreign exchange loan agreement that was a precursor to currency swaps. A parallel loan involves two parent companies taking loans from their respective national financial institutions and then lending the resulting funds to the other company's subsidiary.

For example, ABC, a Canadian company, would borrow Canadian dollars from a Canadian bank and XYZ, a French company, would borrow euros from a French bank. Then ABC would lend the Canadian funds to XYZ's Canadian subsidiary and XYZ would lend the euros to ABC's French subsidiary.

The first parallel loans were implemented in the 1970s in the United Kingdom in order to bypass taxes that were imposed to make foreign investments more expensive.


Investment dictionary. . 2012.

Look at other dictionaries:

  • 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 …   Financial and business terms

  • 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 …   Financial and business terms

  • parallel loan agreement — a contract between the project company and a subcontractor, separate to (or parallel to) the subcontract to which it relates, in which the parties agree that if the subcontractor is entitled to payment from the project company, but the project… …   Law dictionary

  • loan — money lent at interest.A lender makes a loan with the idea that it will be paid back as agreed and that interest will be paid for the use of the money. Glossary of Business Terms Temporary borrowing of a sum of money. If you borrow $1 million you …   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

  • Компенсационный кредит — (back to back loan) Кредит, предоставляемый одной компанией другой компании (обе компании в разных странах), часто в различной валюте, с использованием банка или иного финансового института в качестве посредника в предоставлении кредита (реальные …   Финансовый словарь

  • prestito back to back —   Eng. back to back loan   Prestito bilaterale concesso da una società residente in un paese e da una controllata che risiede in un altro. Il prestito back to back, al contrario del parallel loan ( in cui la società madre si addossa la parte di… …   Glossario di economia e finanza

  • rights of set-off — An agreement defining each party s rights should one party default on its obligation. A setoff is common in parallel loan arrangements. Bloomberg Financial Dictionary …   Financial and business terms

  • Компенсационный/параллельный кредит — BACK TO BACK/PARALLEL LOAN Договоренность между двумя компаниями, работающими в разных странах о кредитовании друг друга в местной валюте. Торговые партнеры прибегают к подобному кредитованию с целью защитить себя от валютного риска …   Словарь-справочник по экономике

  • ПАРАЛЛЕЛЬНАЯ ВАЛЮТА — (англ. parallel currency) – валюта, используемая в странах с высоким уровнем инфляции. Как правило, это иностранная валюта (чаще всего доллар США), наряду с нац. валютой выполняющая все функции денег. В иностр. валюте устанавливаются цены,… …   Финансово-кредитный энциклопедический словарь

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