• The fund amounts to 30,000 million euros, at an interest rate of around 5.9%
  • The municipalities can start paying on May 31 and the autonomous communities on June 30

The Fund for the Financing of Supplier Payments (FFPP), created by the Government, has today signed a syndicated loan worth 30,000 million euros, expandable to 35,000 million, with 26 financial entities.

In this way, the last step is taken so that local corporations and autonomous communities can refinance their debts and put in place the mechanism that will allow suppliers to start collecting the bills owed to them. In the case of municipalities, payments can be made from May 31. For the autonomous communities, the expected collection date begins on June 30.

The syndicated loan has been led by the following entities: Banco Bilbao Vizcaya Argentaria, Banco Santander, Bankia, Caixabank and Instituto de Crédito Oficial are listed as coordinating directors; Banco Popular as the main co-managing entity; and Banesto, Banco de Sabadell, Bankinter, Banco CAM, and CECA as co-directors. The entities listed in the attached table have also participated as financers. The legal structure of the loan has been designed by Cuatrecasas Gonçalves Pereira.

The FFPP was created on March 9 as an instrument to channel syndicated financing that allows the payment of the debts of local and autonomous corporations, in the largest refinancing operation in recent history in Spain. Since then, the terms of the union have been negotiated, an agreement that has taken place particularly quickly given the magnitude of the operation. The invoices will be paid to the suppliers through a financial intermediary, so that the money will come directly to them.

The syndicated loan is endorsed by the Public Treasury, which, in turn, will have the guarantee of the Participation in State Income (PIE) of municipalities and communities. This structure ensures the State the repayment of the loan by the territorial administrations. To access this refinancing mechanism, both local corporations and autonomous communities have had to present a feasibility plan that guarantees their solvency and future payment capacity.

The entities grant the financing to five years, with two of grace. However, municipalities and communities may return it within a period of ten years, with two grace periods, through a refinancing to be carried out by the FFPP. This loan refers to the 3-month Euribor to which a differential is added according to the market conditions prior to the first loan provision. The cost is estimated to be around 5.9%.

Local corporations have already submitted 1,967,000 invoices, for a total amount of 9,750 million euros. Of this figure, suppliers have requested the payment of 1,717,000 invoices, for 9,312 million euros. In the case of the communities, at the moment 3,960,000 invoices have been presented for a value of 17.7 billion euros, a figure that can be extended since the deadline for the presentation of invoices closes on May 22.

This operation involves a significant injection of liquidity into the real economy -equivalent to 3% of GDP- and will provide growth of 0.4% between 2012 and 2013. Furthermore, it is expected that between 100,000 and 130,000 will be generated in that period Job positions.

Through this financial operation, the Government highlights its commitment to fiscal sustainability, the responsibility of the administrations with respect to the economy as a whole and transparency in public accounts.

Lender entityParticipation (in millions of euros)Percentage
Banco Bilbao Vizcaya Argentaria, S.A.3,06710.2%
Banco Santander, S.A.3,06710.2%
Bankia, S.A.3,06710.2%
Caixabank, S.A.3,06710.2%
Official Credit Institute7,00023.3%
Banco Popular Español, S.A.2,1307.1%
Banco Español de Crédito, S.A.1,3004.3%
Banco de Sabadell, S.A.1,1003.7%
Bankinter, S.A.1,0003.3%
Banco CAM, S.A.U.1,0003.3%
Spanish Confederation of Savings Banks *8352.8%
Banca Cívica, S.A.300one%
Banco de Caja de España de Inversiones, Salamanca y Soria, S.A.U.2500.8%
Banco Cooperativo Español, S.A.7502.5%
Banco de Madrid, S.A.1000.3%
Banco Pastor, S.A.2100.7%
NCG Banco, S.A.4001.3%
Cajamar Caja Rural, Cooperative Credit Society2500.8%
Catalunya Banc, S.A.8572.8%
Unicaja Banco, S.A.2500.8%
TOTALEUR 30,000100%
In addition, six entities, represented by the CECA, have participated:
Lender Entity under the representation of CECAParticipation (in millions of euros)
Banco Mare Nostrum, S.A.400
Ontinyent Savings Bank and Monte de Piedad6
Colonya Caixa d´Estalvis de Pollença4
Spanish Confederation of Savings Banks25
Ibercaja Banco, S.A.U.100
Liberbank, S.A.300

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