Brussels, 11/03/2015 (Agence Europe) - On 10 March, the European Stability Mechanism (ESM) approved Spain's request to pay back €1.5 billion in loans early.
This is the second time that Madrid has made an offer of this kind, having paid back a tranche of €1.3 billion early in July 2014 (see EUROPE 11117).
Between December 2012 and February 2013, the ESM lent the Spanish state €41.3 billion to recapitalise and restructure its banking system, under threat of implosion after the Spanish property bubble burst. The loans granted had terms of up to 2027. Once the second early repayment has been made, Spain will still owe the Eurozone's permanent bailout fund €38.2 billion.
Under the agreement concluded between Spain and the ESM, any costs arising from early repayment are to be borne by Madrid. Given the amounts and the timetable, the second early repayment is unlikely to bring about any additional costs, the bailout fund states in a press release.
The director general of the ESM, Klaus Regling, described this move by the Spanish government as a “strong signal of normalisation and a comfortable liquidity position to the markets”. “As Spain has implemented a strong reform agenda, the country is one of the most attractive economies for investors in the euro area”, he added.
It is worth noting that on Tuesday, the ESM issued, for the first time, a €3 billion two-and-a-half-year bond at a negative rate of interest (-0.07%). (Mathieu Bion)