Assessing the range of government guarantees: State support for the MARF

Assessing the range of government guarantees: State support for the

Fecha: mayo 2020

Angel Berges and Irene Peña

COVID-19, MARF, Ayudas financieras

SEFO, Spanish and International Economic & Financial Outlook, V. 9 N.º 3

The third tranche of Spain’s government-backed guarantee scheme in response to COVID-19 will include the allocation of 4 billion euros to secure commercial paper issued on the alternative fixed-income market (MARF for its acronym in Spanish). The idea is to provide new stimulus for tapping the capital markets, helping to close the long-standing gap between Spain and the main European, as well as Anglo-Saxon, economies.

Abstract: The Spanish government has introduced a 100 billion euro guarantee scheme, dispersed across successive tranches that are being adjusted based on the experiences of previous disbursements. The first tranche (20 billion euros) was allocated evenly between SMEs (including the selfemployed) and large enterprises, while the scheme’s second tranche was earmarked in full to the SME segment (including self-employed individuals). Of the total guarantees extended as of early May, 66% had secured SME loans, while 34% supported large enterprise loans. A key novelty of the third tranche is the addition of 4 billion euros to underwrite fixed-income
securities (commercial paper) issued by companies listed on Spain’s alternative fixedincome exchange, the MARF. This initiative will be applicable to commercial paper with terms of maturity of up to 24 months. The guarantees provided for commercial paper issued on the MARF haveb a maximum size of 70%, implying a leverage effect of 143%, such that 4 billion euros of guarantees could drive total commercial paper issuance of around 5.7 billion euros.

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