Tools & technology
Loan Pricing Tool
An intercompany loan pricing tool calculates an arm's length interest rate for related-party lending by combining borrower credit rating assessment, comparable market yield data and loan-specific characteristics such as tenor, currency and seniority. These tools automate steps that were traditionally performed manually across.
Pricing an intercompany loan at arm's length typically requires assessing the borrowing entity's standalone credit rating, since intercompany rates should reflect the borrower's own creditworthiness rather than automatically benefit from implicit group support. A loan pricing tool automates this credit assessment using.
Once a comparable rate range is established, the tool typically documents the selection of the final rate within that range, along with the underlying credit rating methodology and comparable instruments used, producing a report suitable for inclusion in transfer pricing documentation. This structured, repeatable process.
In practice
What matters when applying loan pricing tool
- Automates standalone credit rating assessment
- Searches comparable market debt instruments
- Matches on currency, tenor and seniority
- Produces supportable interest rate range
- Generates documentation for transfer pricing files
Frequently asked
Common questions
Why does intercompany loan pricing use a standalone credit rating?+
Tax authorities generally expect intercompany interest rates to reflect the borrower's own creditworthiness rather than implicit parental support, so pricing tools assess a standalone rating before searching for comparable market rates.
What loan characteristics affect the pricing outcome?+
Currency, tenor, seniority, security and repayment terms all affect which comparable market instruments are relevant, so pricing tools filter comparable data on these characteristics before deriving a supportable interest rate range.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.