Market volatility drives inter-company lending

Patchy inter-company loan administration could leave corporates exposed to breaches of transfer pricing guidance.

There are many reasons why corporates favour inter-company loans over other forms of finance. The ability to pre-empt constraints, such as sudden capital controls, and the avoidance of FX volatility feature high on the list.

The uncertain global business environment of rising interest rates and volatile stock market valuations has created a difficult debt funding environment. This makes effective liquidity management more important in providing funding stability and cost optimization, says Amy Eckhoff, Asia-Pacific head of liquidity and account solutions specialists at JPMorgan.

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