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Gov't saves €950 Mln by early loan repayment

Source: El Pais - Sat 5th Oct 2013
Gov't saves €950 Mln by early loan repayment

The government has informed banks that it will be repaying three years ahead of schedule €12 billion it borrowed to create a fund last year to help regional and local governments pay off debts to service suppliers, sources told EL PAÍS Thursday.

Fernando Jiménez Latorre, chairman of the council that oversees the so-called Fund for the Financing of Payments to Suppliers, sent letters to some 20 banks, including BBVA, Santander, Bankia and Caixabank, informing them of the government's "irreversible decision" to pay off the loan early. In May 2012, the Rajoy administration signed up to a syndicated loan of €27.371 billion with a maturity date of 5 years and 18 months.

Government sources say positive market conditions have allowed for the early payoff. The Rajoy administration stands to save some €950 million in interest payments through this operation, financial sources said.

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