(BN) Spain Helped Valencia With $160 Million Payment, El Pais Reports

Posted by on Jan 4, 2012 in Uncategorized | No Comments

We first got this story from the www.trumanfactor.com people.  It seems as another case where a sovereign is slinging around guarantees with reckless abandon.  This time it is to help a state rather than a bank, but the idea is the same, sovereigns are creating more and more contingent off-balance sheet liabilities to keep struggling entities alive.  According to this article, they couldn’t provide a written guarantee since that would be illegal, but verbal was a ok.  Maybe the EU can start issuing “highly confident” letters as a way out of the debt mess.

Spain Helped Valencia With $160 Million Payment, El Pais Reports
2012-01-04 06:33:34.972 GMT
By Ben Sills
     Jan. 4 (Bloomberg) — The Spanish government helped the
Valencia region, the nation’s most-indebted, make a 123 million-
euro ($160 million) payment to Deutsche Bank AG that had been
overdue since Dec. 27, El Pais reported.
     The Spanish treasury gave a verbal guarantee to an
unidentified lender persuading it to advance the funds the
regional government needed to make the payment, the newspaper
said, citing people it didn’t identify at the national economy
ministry and the regional economy department as well as finance
ministry officials from the previous administration which left
office last month.
     The verbal guarantee was extended to get round a law which
prevents the central government from formally backstopping the
debts of the regions, the newspaper added.
     The central government also advanced its regular transfers
to the regions by about 10 days to Jan. 3 to help Valencia meet
its financial obligations, El Pais said.


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