Recall the core arm's-length questions for intra-group loans, guarantees, cash pooling, and captive insurance.
Loan first question Before pricing an intra-group loan, what must you delineate? Debt capacity, amount, tenor, currency, security, covenants, borrower credit profile, group support, and realistic alternatives. A market spread is only useful after it matches the actual transaction. Support Implicit support or explicit guarantee? Do not charge a guarantee fee unless the guarantee adds value beyond implicit support. Loan shortcut Can we just use the parent's borrowing rate plus 200 basis points? Treasury wants a quick intercompany loan rate. Your line Parent cost is a data point, not the borrower's arm's-length price. We need the borrower credit profile, loan…
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