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

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.

 

Click here for web link

Link to Company News:{DBK GR <Equity> CN <GO>}

For Related News and Information:

Top Stories:{TOP<GO>}

To contact the editor responsible for this story:

Ben Sills at +34-91-700-9603 or

bsills@bloomberg.net