Spain to extend voluntary debt cancellations for companies, sources say

MADRID, Nov. 25 (Reuters) – The Spanish government plans to extend voluntary cancellations of state-guaranteed loans for six months as part of a debt restructuring plan to help companies cope with the pandemic of COVID-19, according to three sources familiar with the matter told Reuters.

“The plan contemplates extending the haircuts on state guaranteed loans from late 2022 to June 2023, among other measures, and in line with recent extensions granted by the EU,” a government source said, adding that these could be approved as soon as possible. at the next cabinet meeting on Tuesday, although details are still being finalized.

A package of measures to help companies reduce excess debt and improve solvency, including € 3 billion ($ 3.36 billion) in debt restructuring, was approved in March, incorporated into a voluntary code of conduct to be implemented by banks.

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The Ministry of the Economy declined to comment.

While the focus of the relief measures has been on liquidity solvency issues across Europe, Spanish companies have also been able to apply for equity loans, a hybrid instrument that companies can convert into equity.

These will be extended until June 2022 from December for companies considered solvent, one of the sources said.

The code of good practice, in place until December 1, 2022, would also be extended until June 2023, one of the sources said.

Under the code, Spanish banks are enforcing voluntary cancellations of existing government loans as part of debt restructurings for companies whose revenues have fallen significantly.

At the start of the pandemic, the government approved state-guaranteed loans worth 100 billion euros to help businesses and households cope with their liquidity lines, followed later by 40 billion euros. euros in investment loans. Both measures were extended on Tuesday. Read more

Write-offs are considered a measure of last resort under a loss sharing scheme set by each loan.

BBVA (BBVA.MC) CEO Onur Genc said last month that the bank had hardly received any requests from customers to implement cancellations, while adding that it would monitor the situation. closely.

($ 1 = 0.8920 euros)

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Reporting by Jesús Aguado, edited by Andrei Khalip and Toby Chopra

Our standards: Thomson Reuters Trust Principles.

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