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Cross currency swap on loans

former_member46882
Discoverer
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Hi,

I have this scenario whereby a loan is taken and at the same time the company enters into a cross currency swap agreement related to the loan mentioned earlier. As the loan is catered in Money market, and cross currency swaps in under the derivatives, how do I ensure these 2 transactions are linked? Without the link, it looks like its 2 separate transactions (as if it's 2 separate loans) if the underlying is in Money market and the other one is in derivatives. Please share your expertise.

Thanks.

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Answers (1)

Answers (1)

Gustavo_Vazquez
Active Contributor
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Hi HCL,

They are 2 different transactions. You can link them through Reference or Assignment, but only as a text reference.

Kind Regards

former_member46882
Discoverer
0 Kudos

Hi Gustavo,

Isnt' creating 2 different contracts is like having 2 different transactions? By creating 1 on loan and 1 on swap, will it be like double posting whereby loan principal is having posting to GL as well as the swap on the principal and interest? Appreciate your expertise.

Thanks.

Gustavo_Vazquez
Active Contributor
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yes, it is.the nature of the contracts that makes it . The output of the loan will have to go on the SWAP.

You have to know the specifics of the financial transaction (cashflow, repayment, swap conditions, etc).

AFAIK there is no product to represent this contract.

Kind Regards