At last, it's official that there will be no hispanobonds. But there will be a Territorial Financing Mechanism available for regional governments. This fund will be managed in accordance with guidelines imposed on Spain by the EU. Designed to pump liquidity into Spanish regional governments, the fund will be managed by the Ministry of Finance and capitalized with 18 billion euros. 12 billion will come from the Spanish Treasury and 6 billion from Loterías.
This level of funding won't have much impact on public accounts, because Loterías is advancing the funds to the Ministry of Finance and collecting interest on future earnings.
Firms who take out loans from the mechanism will have to follow strict tax and financing requirements, which could even expose them to an intervention if necessary. At the expense of increased oversight and regulation, this measure will pump much-needed funds into Spain.
