(Adds details on Spain’s economic rebound)
MADRID, Sept 1 (Reuters) - Spain’s state-backed credit lines of around 140 billion euros ($167 billion) would cover around 75% of companies’ liquidity needs as they try to weather the impact of the coronavirus pandemic, the Bank of Spain governor said on Tuesday.
“The remaining amount would need to be financed by the companies’ own liquid assets using unused volume of the credit lines granted, or new unsecured debt,” Pablo Hernandez de Cos said at a financial event.
The Spanish government has approved guaranteed funding lines of 140 billion euros and set up a 10-billion-euro fund to potentially bail out firms in “strategic sectors” that are considered viable but experiencing solvency problems.
De Cos said Spanish companies with liquidity strains may suffer solvency problems and acknowledged that in the current economic context, firms which survived the crisis would end up with more debt on their balance sheets and less solvent demand.
With the central bank expected to update its outlook in around two weeks, De Cos said the Spanish economy would likely grow in double digits in the third quarter after a record drop of 18.5% in the preceding three-month period.
The central bank has said the economy could contract by 9%-11.6% in 2020, and has not ruled out a contraction of 15.1% due to the possibility of a new wave of coronavirus.
Since bringing the first wave largely under control through a strict lockdown that ended in June, Spain has been hit by a sharp resurgence of infections.
$1 = 0.8369 euros Reporting by Jesús Aguado and Emma Pinedo; editing by Andrei Khalip, Victoria Waldersee and Mark Heinrich
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