The Catalonian regional government has pitched several financial institutions about issuing a round of government bonds at the end of the summer. According to sources from elEconomista, they would issue around 3 billion euros worth of three-year bonds with a 6% interest rate.
This yield would attract fixed income investors, considering that the government has approved a law that limits interest payments from Euribor banks to 1%, which translates to long-term fixed income investments between 3.5% and 4%.
In various public statements, Economic advisor Andreu Mas Colell has indicated his intention to convert one-year passive debt to a longer period, which would allow the Catalonian government an easier payment schedule and a more flexibility for refinancing.
If the deal goes through, the majority of the issued debt will help pay back debt from bonds that the former Catalonian government issued in November of 2010. Under economic advisor Antoni Castells´s mandate, the government failed to refinance and restructure the bonds for investors, something that hasn?t been done since the debt crisis of the 1980s.
Translated and Edited in English by Brandon Dyches and Jose L. De Haro
