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Spain launches private placement for regions fund

Source: Reuters - Mon 8th Oct 2012
Spain launches private placement for regions fund

Spain's Treasury will carry out a €4.86 billion private placement to finance part of the country's regional liquidity fund, issuing bonds that will mature in 2015, 2016 and 2017, the Treasury said on Monday.

The southern region of Andalusia said it had sent a letter to Madrid on Monday formally requesting €4.9 billion in aid from the €18 billion fund, which has little firepower left after six regions asked for help.

The private placement will launch on October 11 and close on October 17, the Treasury said. The deal follows a successful private placement in September.

Spain set up the regional liquidity fund this year to help the country's regions cover maturing debt costs. Spanish banks are expected to contribute €8 billion to the fund with the remainder coming from lottery funds and sovereign debt.

The country's biggest lenders Santander, BBVA and La Caixa will contribute the lion's share of the loan to form part of the fund, banking sources close to the negotiations told Reuters in September.

Spain's 17 highly-devolved regions overshot deficit targets in 2011, and are expected to miss them again this year.

The Canary Islands were the latest region to request aid, asking for €757 million on Friday, leaving the fund with around €1.5 billion.