A loan which is made between two corporations based in two different countries, but each has a subsidiary in the country where the other is headquartered. Each subsidiary is interested (and would be better off) to borrow in the currency of the country in which it is located. To that end, one subsidiary borrows from the other’s parent, whilst the other receives a loan from the parent of its counterpart. These loans made between entities operating in the same country would help overcome problems associated with inconvertibility of currencies, withholding taxes, and exchange controls, among others.
April 14, 2021
