Spain is issuing as much 2.67 billion euros ($3.53 billion) in six floating-rate notes to partly replace a syndicated loan signed with banks to help regions repay their debts.
The bonds, which are guaranteed by the central government, will pay 498 basis points above the three-month Euribor, the rate banks say they see each other lending at in euros, and mature between November 2014 and May 2017, the government said today in the official gazette. The sale started on Dec. 17 and each issue will amount to 444.8 million euros, it said.
The government created a fund in March known as FFPP to help Spain’s 17 semi-autonomous regions and more than 8,000 municipalities clear their backlog of unpaid bills as they struggled to find funding amid a deepening recession that has undermined tax receipts and delayed a budget-deficit reduction.
The FFPP’s board authorized it on May 16 to sign a 30 billion-euro syndicated loan convertible into bonds starting from Dec. 21, today’s gazette said.
Prime Minister Mariano Rajoy has pledged more than 40 billion euros since coming to power a year ago, including the FFPP, to avoid any regional or local default as the nation itself is on the brink of a junk rating.
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