MADRID- Spain's government on Tuesday approved a six-month extension, until June 2023, for voluntary write-offs of state-backed loans as part of a debt restructuring plan to help companies cope with the COVID-19 pandemic, the Economy Ministry said.
The plan follows the recent extensions granted by the European Commission for support measures and was in line with a Reuters report last week.
A set of measures aimed at helping companies cut excess debt and boost solvency, including 3 billion euros ($3.36 billion) in debt restructurings, was approved in March, embedded in a voluntary code of practice to be implemented by banks.
As the focus of relief measures switched to solvency issues from liquidity across Europe, Spanish companies were also able to apply for participatory loans, a hybrid instrument that companies can convert into capital.
The government also extended these until June 2022 from December for firms considered solvent and prolonged the deadline for the self-employed and companies to apply for an extension of their repayment period.
The code of good practice will also be amended to allow companies and households affected by the volcano eruption in La Palma to apply for credit support measures.
Under the code, Spanish banks apply for voluntary write-offs of existing state loans as part of debt restructurings for firms whose revenues have fallen significantly.
At the beginning of the pandemic, the government approved state-backed loans worth 100 billion euros to help firms and households meet their liquidity lines, followed later by 40 billion euros in investments loans. Both measures were extended this month.
The write-offs are seen as a measure of last resort under a loss-sharing scheme set by each loan.
(Reporting by Jes?s Aguado, editing by Andrei Khalip and Ed Osmond) ((firstname.lastname@example.org; +34 91 835 68 32; Reuters Messaging: Reuters Messaging: email@example.com))