Resolution of 7 October 2019 updating Annex 1 of the Resolution of 4 July 2017 on financial prudence principles for autonomous communities and local entities

I. GENERAL PROVISIONS
MINISTRY OF ECONOMY AND ENTERPRISE
14424 Resolution of 7 October 2019, from the Secretary General of the Treasury and International Financing, updating Annex 1 included in the Resolution of 4 July 2017, from the Secretary General of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to borrowing and derivative operations of autonomous communities and local entities.

The Resolution of 4 July 2017, from the Secretary General of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to borrowing and derivative operations of autonomous communities and local entities, establishes in its third section that "the maximum total cost of borrowing operations, including commissions and other expenses, except for those cited in Annex 3, shall not exceed the State's financing cost at the average term of the operation, increased by the corresponding differential as established in Annex 3 of this Resolution.

Autonomous communities and local entities that have their own valuation tools or independent external advice may determine the Treasury's financing cost at the time of the operation based on the methodology contained in Annex 2 of this Resolution.

The remaining Administrations, to know the State's financing cost at each average term, will use the table of fixed rates or the maximum differentials applicable to each reference that the General Directorate of the Treasury and Financial Policy publishes monthly, by Resolution. The published maximum costs will remain in force until new costs are published."

In accordance with this obligation to update monthly the State's financing cost at each term, a new Annex 1 is published.

Considering the current State financing costs, in the case of loan operations, if the maximum total cost referred to in the third section of the Resolution of 4 July 2017, from the Secretary General of the Treasury and Financial Policy, were negative, loans may be formalized at a rate of 0%.

Madrid, 7 October 2019.–The Secretary General of the Treasury and International Financing, Carlos San Basilio Pardo.

ANNEX 1
Fixed interest rates and differentials of the State's financing cost for the purposes of compliance with the third section of the Resolution of 4 July 2017, from the Secretary General of the Treasury and Financial Policy Prices taken on 1 October 2019 at market close

Average life of the operation – Months	Maximum annual fixed rate – Percentage points	Maximum differential over 12-month Euribor – Basis points	Maximum differential over 6-month Euribor – Basis points	Maximum differential over 3-month Euribor – Basis points	Maximum differential over 1-month Euribor – Basis points
1	-0.61	-10
2	-0.53	-3
3	-0.53	-8	-3
5	-0.52	-7	-2
6	-0.52	-12	-6	-1
7	-0.52	-11	-5	1
8	-0.51	-9	-2	3
10	-0.51	-8	-1	4
11	-0.51	-8	-1	4
12	-0.51	-16	-7	-1	4
15	-0.51	-15	-6	0	5
16	-0.50	-14	-5	2	7
17	-0.50	-14	-5	2	7
18	-0.50	-14	-5	2	7
19	-0.50	-14	-5	1	7
24	-0.50	-13	-4	3	8
36	-0.43	-6	2	9	15
48	-0.35	0	9	16	22
60	-0.29	3	12	19	25
72	-0.18	10	18	26	31
84	-0.09	15	23	31	36
96	-0.01	18	26	33	39
108	0.06	19	27	34	40
120	0.14	21	29	36	42
132	0.22	23	31	38	43
144	0.26	23	31	37	42
156	0.32	24	32	38	43
168	0.44	32	40	45	51
180	0.51	36	44	49	54
192	0.57	39	47	52	57
204	0.58	37	45	50	55
216	0.62	39	46	51	56
228	0.67	42	50	54	59
240	0.72	45	53	57	62
252	0.77	48	56	60	65
264	0.82	53	60	64	69
276	0.85	55	63	67	71
288	0.88	58	65	69	74
300	0.92	60	68	71	76
312	0.96	65	72	76	80
324	1.01	70	77	80	85
336	1.01	70	78	81	85
348	1.01	70	78	81	85
360	1.01	70	78	80	85

The basis used for the calculation of the maximum annual fixed rate contained in the table above is the actual/actual basis. In the event that a basis other than the aforementioned is used, the appropriate adjustment must be made.

In those fixed-rate operations with an interest accrual period different from one year, the maximum fixed rate must be calculated as the equivalent rate to the annual fixed rate for the considered accrual period.

The maximum fixed interest rates and differentials applicable for operations whose exact average life is not published in this table shall be found by linear interpolation between the two closest rates or differentials to the average term of the operation.

Regarding these fixed interest rates or differentials over Euribor, the maximum differentials contained in Annex 3 of the Resolution of 4 July 2017, from the Secretary General of the Treasury and Financial Policy, which defines the principle of financial prudence applicable to borrowing and derivative operations of autonomous communities and local entities, may be applied.

Given the current levels of State financing cost, in the case of loan operations, if the maximum total cost referred to in the third section of the aforementioned Resolution were negative, loans may be formalized at a rate of 0%.