The Swedish National Debt Office has been tasked by the Government to take preparatory actions for issuing state credit guarantees for Swedish airlines. The guarantee programme is a measure for mitigating the economic impact of the new coronavirus.
In accordance with the mandate, the credit guarantees shall altogether amount to a maximum of SEK 5 billion. They are being issued to benefit companies with a Swedish licence for commercial air transport and which have their main operations or are domiciled in Sweden.
As a first step, The Debt Office will now request information from the airlines that may be included. On the condition that the Riksdag and the European Commission approve the proposal, the guarantee programme will be set up as soon as possible.
“The Debt Office continuously works with central government guarantees. Under crisis conditions, they are one of the tools we can use to maintain financial stability and protect the economy. Now, the Debt Office is working swiftly to be able to set up a guarantee programme. Thereby, the negative economic impact of the coronavirus can be mitigated and the Swedish economy supported,” says Director General Hans Lindblad.
The mandate stipulates that the issuance of guarantees shall be carried out in accordance with the Lending and Guarantees Ordinance (2011:211).
- New credits shall be able to be guaranteed up to 90 per cent of the loan amount.
- The companies’ share of the guarantee framework is determined based on the size of the company.
- The share of the guarantee framework for SAS AB may amount to a maximum of SEK 1.5 billion.
- The unique market situation resulting from the new corona virus (SARS-CoV-2) means that the companies’ financial standing and financial integrity should be assessed based on the previous year’s annual accounts.
- The terms of the guarantee shall be designed taking into account the risk to the central government and to assert its rights.
- A guarantee may not be issued unless there are terms in the guarantee contract to prevent the guaranteed provision of liquidity being used for a purpose other than that which is absolutely essential to prevent the failure of the company, such as profit withdrawals or bonus programmes for senior executives in the company.