Bailing out the highway system

The Public Works Ministry has made its last offer to highways systems that are near bankruptcy. At this point, it looks like the national government and six big banks will end up bailing them out. The banks would accept a loan forgiveness plan that overlooks half of what the highways owe ? around 3.8 billion euros ? and the state will end up footing the rest of the bill.

As a result, the government will own 100% of these highways, while the banks will collect half of the debt and get a chance to free up half of the debt provisions that they have stocked away against their highway system loans. With rigorous bank stress tests just around the corner, the banks are looking forward to this possibility.

The highways have a week to respond to the proposal. If they reject it, then a bankruptcy proceeding will automatically follow and the state will incur a major expense. According to industry calculations, the national government would have to cover 5 billion in asset costs plus all the legal costs that would ensue. Ana Pastor has support from management. Seopan thinks that creating an operating company out of the private highway system could be the best solution for the public interest and the smartest option for the companies that are involved. If the systems become 100% nationalized, the government can keep the EU from classifying state aid as a bailout, and this would be possible if the government-owned company absorbs the old highway system companies.

Montoro remains silent on the issue, because a 50/50 split results in neither debt nor deficit. And the deal that Public Works is posing is the best option for taxpayers, although it could invite increased tolls on highways.