Spain readies measures to boost companies' solvency, government source says

Spain is expected to approve on Friday a new package of measures aimed at boosting companies' investment capacity and solvency in an attempt to revive the coronavirus-battered economy, a government source said. News website elconfidencial.com reported on Thursday that the government would sign off on an additional 40 billion euros in guaranteed funding lines and 10 billion euros aimed at boosting corporates' solvency.


Reuters | Updated: 02-07-2020 15:44 IST | Created: 02-07-2020 15:44 IST
Spain readies measures to boost companies' solvency, government source says
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Spain is expected to approve on Friday a new package of measures aimed at boosting companies' investment capacity and solvency in an attempt to revive the coronavirus-battered economy, a government source said.

News website elconfidencial.com reported on Thursday that the government would sign off on an additional 40 billion euros in guaranteed funding lines and 10 billion euros aimed at boosting corporates' solvency. In March, the government approved state-backed credit lines of up to 100 billion euros to help support mainly small and mid-sized companies and self-employed against the fallout from the pandemic.

The government source could not confirm the amount under discussion, but said new measures should be approved at a cabinet meeting on Friday. "Measures are aimed at improving the financial structure of companies to also lower their risk of defaulting on their payments with lenders," the source said, adding that financial instruments were still being discussed.

Policymakers in Europe have been discussing options for getting more equity, rather than debt, into businesses but few countries have ready-made vehicles for funnelling mass investment into SMEs. While several governments have set aside funds for capital injections into large companies, they are having to think up innovative options for smaller firms.

The Bank of Spain has repeatedly called to extend measures to support companies and the government had already said it was considering supporting new funding. Last month, Bank of Spain Governor Pablo Hernandez de Cos said that mechanisms were needed to encourage the growth of small and mid-sized companies to reduce their higher borrowing costs compared to European peers.

De Cos also said it was urgent to review processes of restructuring, insolvency and easing companies' financial burden.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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