The creditworthiness of the borrower is one of the main factors that independent investors take into account in determining an interest rate to charge. Credit ratings can serve as a useful measure of creditworthiness and therefore help to identify potential comparables or to apply economic models in the context of related party transactions. Furthermore, in the case of intra-group loans and other financial instruments that are the subject of controlled transactions, the effect of group membership may be an economically relevant factor that affects the pricing of these instruments. Accordingly, this subsection elaborates on the use of credit ratings and the effect of group membership in the context of pricing intra- group loans. Where appropriate, reference to this subsection will be made in other parts of this guidance.
TPG2020 Chapter X paragraph 10.62
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By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Financial transactions, Intra-group loan, Loan, Treasury functions, Use of credit ratings
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