[Important: By having each party borrow funds in its home currency, a parallel loan seeks to avoid exchange risk—an adverse change in exchange rates between two currencies.]. Some parties will enlist the services of a broker, but then brokerage fees have to be added to the cost of the financing. 307 0 obj
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IFC provides long-term local-currency solutions and helps companies access local capital markets. 0000002405 00000 n
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+ International Monetary Fund, International Financial Statistics and data files. The proposed loan will help finance the expansion of Yangxiang’s pig breeding and farming capacity and its ancillary facilities in Guangxi. We also manage currency and interest rate risks of assets and liabilities on IFC's funded balance sheet within prudent risk limits. By matching the currency denomination of assets and liabilities, they can concentrate on their core businesses rather than worry … During the approval process, the borrower may be contacted for more information or clarification.
They also allow for lower interest rates as each local company might have an advantage in borrowing on its home turf, as opposed to borrowing as the local subsidiary of a foreign company.
Telephone: (765) 771 8000 Toll Free: (888) 564 4328 FAX: (765) 447 3299 Federally Insured by the NCUA In line with their debt management strategy requirements or changing market conditions, IFL borrowers have the option to change from a floating to a fixed interest rate or vice versa. DOWNLOAD OUR APP Available in. 0000016413 00000 n
A fixed-for-fixed currency swap involves exchanging fixed interest payments in one currency for fixed interest payments in another, Special Considerations for a Parallel Loan, The Indian Rupee: How the INR Is Managed and Circulated. 0000001616 00000 n
After this initial contact and a preliminary review, IFC may proceed by requesting a detailed feasibility study or business plan to determine whether or not to appraise the project.
The investment proposal can be submitted to the IFC field office that is closest to the location of the proposed project. The credit rating of the subsidiary may not be as high and as a foreign company, it may be considered as riskier.
(2) Expressed as a percentage of the principal amount involved, and payable as a lump sum. Default risk is also a problem, as a failure by one party to pay back the loan in a timely manner does not release the obligations of the other party. 0000003568 00000 n
This allows us to tailor risk management and loan products to the needs of IFC's clients while hedging the resulting market risks. While IFC loans traditionally have been denominated in the currencies of major industrial nations, we have made it a priority to structure local-currency products. To learn more about cookies, click here. If you continue to navigate this website beyond this page, cookies will be placed on your browser. The worksheet serves as the basis for the preparation of the applicable draft legal documentation. 0000004201 00000 n
Countries are classified into four pricing groups based on income and other factors. - Loan Choice Worksheet (LCW). Interest Rate Caps/Collars: For IFLs with a fixed spread the borrower may opt to cap (set an upper limit) or collar (set upper and lower limits) on the variable lending rate (i.e., the reference rate plus the fixed spread) for up to the entire disbursed amount. Such “fixing” of the variable spread will be effected based on the fixed spread applicable to the loan prevailing at the time of the request. Salary loan; Auto Loan; Personal Loan; Secured loan ( Cash Collateral) Fixed Deposits. (3) The variable spread over the reference rate may be changed to a fixed spread over the reference rate, but not vice-versa. Telephone: (765) 771 8000 Toll Free: (888) 564 4328 FAX: (765) 447 3299 Federally Insured by the NCUA And even if they do find appropriate partners, the terms and conditions desired by both may not match. Similarly, IFL provides a currency conversion option for hard currencies as well as specific local currencies. 0000019797 00000 n
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