Regulatory Alerts2017-07-06
Resolution of 4 July 2017 defining the financial prudence principle applicable to borrowing and derivative operations of Autonomous Communities and Local Entities
The Secretary General of the Treasury and Financial Policy issued this resolution to define the financial prudence principle governing borrowing and derivative operations for Spain's Autonomous Communities and Local Entities. It establishes maximum financing cost limits based on state debt costs plus defined spreads, mandates the use of standard market derivatives, and prohibits complex financial instruments that increase financial burden or defer costs. The regulation also introduces flexible rules for loan restructuring to generate savings while maintaining strict reporting obligations and coordination requirements for public bond issuances.
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