Extension of the term of COVID-19 guarantee facilities

On June 21, 2022, the Council of Ministers approved the extension of the term of guarantee facilities granted through ICO within the scope of the facilities established for the COVID-19 health crisis. The extension will be for up to 10 years in the case of guarantees based on measures providing limited amounts of aid set out in section 3.1 of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (the “Temporary Framework”), and up to 8 years in the case of guarantees granted as state loans set out in section 3.2 of the Temporary Framework. It should be noted that the measures on the limited amount of aid (section 3.1 of the Temporary Framework) are those that do not exceed €2.3 million per undertaking, setting lower thresholds for the fishing, aquaculture and agriculture sectors.

Thanks to this measure, the extension of the term of the guarantees can be requested once the corresponding measures in the Temporary Framework have expired (i.e., beyond June 30, 2022).

The aim of this measure is to avoid unnecessary restrictions that hinder the restructuring of loans and other financing transactions that rely on those guarantee facilities if the undertakings run into financial and operational difficulties after June 30, 2022, and the financial intermediaries agree to extend the term to maturity of the secured financing transaction. In any case, the measure will become effective when the European Commission specifically authorizes it.

The request to extend the term of the guarantee will be subject to the acceptance of the financial intermediaries of transactions guaranteed according to standard credit practices and policies. Also, the resolution only allows for the term to be extended once per transaction.

The cost will only vary in the case of guarantees that meet the requirements established for loan guarantees in accordance with section 3.2 of the Temporary Framework. In these cases, the resolution provides for a new commission that will be applied retroactively to the moment when the transaction was completed.

The extension of the term of financing and the facility will not result in an increase in the interest applicable to the financing, or commissions or other costs payable by the debtor.

The conditions to apply the extension of the term of maturity of the facilities will be set out in an addendum to the framework collaboration agreement entered into between the financial intermediaries and ICO.