RD 8/2020 contains a wide range of urgent extraordinary measures to address the economic impact of COVID-19, including, among others, civil, commercial, administrative, labour and tax measures. For the purpose of this note, we will focus on the measures contained in RD 8/2020 aimed to sustain and boost exportations during COVID-19 crisis.

Main measure aims to reinforce working capital of Spanish exporters by means of an increase of the State cover for working capital financing up to euro 2,000 million, through Compañía Española de Seguros de Crédito a la Exportación, S.A. Cía. de Seguros y Reaseguros (“CESCE”) as export credit enhancement agency.

Key facts:

• working capital additional cover up to euro 2 billion through Spanish export agency CESCE for working capital solutions within export credit transactions;
• timing constrain (6 months period fresh money needs), objective (working capital export credits for financing new needs) and subjective (non-listed companies suffering working capital constraints);
• shortening processing periods; and
• any type of commercial transactions included.

a)  What does it consist of?

Article 31 of RDL COVID-19 authorises the creation for a 6 months period of an insurance cover line up to euro 2 billion. This amount will result from the Internationalisation Risk Reserve Fund (Fondo de Reserva de los Riesgos de la Internacionalización).

b)  To who is it addressed?

From the perspective of potential beneficiaries, these will be limited to non-listed companies:

• internationalized or in the process of internationalization, which meet at least one of the following requirements: (a) the international business represents one third of the income; or (b) they have recurrently (considering the last 4 years) exported; and
• they have liquidity problems or access constraints to financing as a result of the impact of COVID-19 on their business activity,

excluding those companies in a bankruptcy or pre-bankruptcy situation, as well as those in payment default before public companies or the Administration, registered before December 31, 2019.

c)  Purpose?

Reinforcing working capital of Spanish exporters by means of an increase of the State cover for working capital financing up to euro 2,000 million, through Spanish export credit agency CESCE.

d)  Conditions and requirements?

From an objective perspective, working capital credits for the exporter may be granted, without any need of being directly related to international agreements, if they result from a complete new financing need and not deriving from a pre-pandemic situation.

It also provides agility for all kind of procedures, analysis and decisions, all within the framework of the market conditions that have caused the health crisis.

The guarantee line will cover all type of commercial transactions, whether they involve the supply of goods, provision of services, or any other kind of activity carried out by Spanish companies.

RDL COVID-19 states CESCE will act as main hedge driver. On an extraordinary basis, any necessary budget will be allocated to the Internationalisation Risk Reserve Fund to guarantee the financial sustainability of such Fund and, consequently, to those entities who have decided to grant working capital financing for export, on the basis of the protection of this extraordinary nature regulation.