Spain aims to improve state-backed credit lines in coming weeks

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MADRID, Oct 29 (Reuters)The Spanish government expects to approve in the coming weeks a potential extension and modification of state-backed credit lines that provide companies with much-needed help to survive the coronavirus pandemic, Economy Minister Nadia Calvino said.

The Spanish government has approved guaranteed funding lines of 140 billion euros and set up a 10-billion-euro fund to potentially bail out firms in “strategic sectors” that are considered viable but experiencing solvency problems.

This is managed by Spain’s state agency Instituto de Credito Oficial (ICO).

“We are working with the European Commission and the financial sector to work out how we can improve the ICO guarantee lines to increase the grace period and extension of those credits”, Calvino said on Thursday.

The first credit line of 100 billion euros approved in March guaranteed credits for five years, with a second line of 40 billion euros approved later in July, backing credits for eight years.

As part of the scheme, the state guaranteed around 80% of unpaid loans to small and mid-sized companies and 70% for bigger ones. Banks and companies also negotiated grace periods as part of their credit lines.

The ICO and banks are now looking into how to modify and better implement credit lines to relief the debt burden for viable companies while helping to restructure their credits, Spanish executives have been saying during third-quarter results.

(Reporting by Jesus Aguado and Emma Pinedo, Editing by Inti Landauro and Ingrid Melander)

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