MADRID (Reuters) - Spain’s Treasury aims to raise 3 billion euros ($3.9 billion) through a private placement with Spanish banks as part of an emergency liquidity fund aimed at lowering borrowing costs for cash-strapped regions.
The September 21 operation will include floating-rate notes and bonds due in 2015, 2016 and 2017 and is the first government issue to back the fund, set up to help regional governments shut out of international debt markets, the Treasury said on Thursday.
The regional governments are at the heart of concerns about the country’s economy and their ability to tackle budget deficits could play an import role in Spain avoiding a full-scale bailout.
The regions, alongside the struggling banking system, have been hit by a real estate boom and bust which left banks burdened with billions of euros in soured property assets and regions starved of taxes from real estate transactions.
The Treasury said it had already secured commitments from a group of Spanish banks set to contribute 8 billion euros to the 18 billion euro fund which will also comprise lottery funds and sovereign debt.
The remaining 5 billion euros of the banks’ component will be disbursed by mid-October, the Economy Ministry said in a statement.
The national lottery - Sociedad Estatal Loterias y Apuestas del Estado SA (SELAE) - aims to raise 6 billion euros through a syndicated loan with international banks to finance its contribution to the rescue fund.
The remaining 4 billion euros for the fund will come directly from the Treasury.
The private placement includes a floating-rate note maturing January 31, 2016, a reissue of an outstanding 3 percent bond due April 30, 2015, a reissue of a 3.25 percent bond due in April 2016 and an outstanding instrument due January 2017. ($1 = 0.7759 euros)
Reporting By Jesús Aguado and Tomas Cobos; Editing by Sonya Dowsett/Ruth Pitchford