The Archipelago is positioned as one of the territories with the most attractive credit metrics
The response of the markets to the financial needs of the Canary Islands supports the solvency of the Autonomous Community, which enjoys one of the strongest credit metrics of all the territories of the State and registers the lowest debt per inhabitant ratio in Spain.
The products that the Government of the Canary Islands has been launching to the financial markets in the last three years have obtained the approval of banks and institutional investors, who have subscribed to them with alacrity.
The Canarian Vice President and Minister of Finance, Budgets and European Affairs, Román Rodríguez, highlights the “trust” that the Autonomous Community generates among investors, which is, in turn, a guarantee when it comes to covering expenses. that the Executive is statutorily entrusted with and satisfy the provision of essential public services to citizens.
Rodríguez emphasizes, in any case, that the operations formalized by the Canary Islands for debt management in this mandate have had to do with the renegotiation of pre-existing loans and that, in no case, are they new indebtedness.
“We have a very solid financial position and that would allow us, if more complicated times come and it were strictly necessary, to go to the markets to obtain financing on very good conditions,” says the vice president.
It so happens that the Canary Islands went to the markets a few weeks ago with a ten-year bond issue of 300 million euros to finance the extension of the average life of the current debt portfolio of the Autonomous Community. The last public bond placement was in 2006, although there have been subsequent ones but negotiated directly with the banks.
The general director of the Treasury and Financial Policy, Dunia González, explains that the response of investors to this issue has been very positive, not in vain the offer exceeded 500 million euros, “managing to reduce the price to 23 basis points above of the Spanish debt.”
Investors of seven different nationalities participated in the operation. 44% were foreign investors, especially Germans and Austrians, with 18% together; Portugal, with 10%, England and Ireland, 6%; France 5% and, finally, Switzerland and Italy. with 3% and 2% respectively.
The banks mandated by the Minister of the Treasury for the issue were BBVA, Crédit Agricole CIB, HSBC and Santander, entities that have agreed on the boost that the operation represents for the future of the Canary Islands.
“The Archipelago is beginning to rise again and the reputation in the markets supports the good work done by this Community, while offering the opportunity for new synergies,” emphasizes González, who recalls the plan that the Government has developed to reducing debt interest payments.
The refinancing of the debt of the Autonomous Community undertaken in the last two years will allow savings of 80 million euros and a reduction of almost 50% of interest until 2029.
In addition to going on the market to refinance previous debt, the 894 million this year have also been financed, obtaining bilateral loans with low interest from the national market.
The Canarian Government, consequently, is in a position to face the challenges that lie ahead, especially those linked to the evolution of the pandemic and its eventual impact on the economy. Not only with the preparation of prudent and realistic regional Budgets for 2022, but with the support of a financial policy that would allow resorting, if necessary, to new debt that would be subscribed without problems by investors.