C 75/32
EN
Official Journal of the European Union
28.2.2023
3.6.1.
Hybrid loans are the chosen instrument for different public and private initiatives to address the lack of capital funding across the EU: at least six programmes in three Member States, as well as some European Investment Fund programmes, use this hybrid participative loan: i) France has the Relance Programme, an EUR 12,7 billion government-supported subordinated debt programme, targeted at 10 000 firms, mainly SMEs, using participative loans and subordinated bonds.
This programme is being distributed by banks and is financed by institutional investors; ii) In Spain, the EUR 1 billion Fund for the Recapitalisation of Covid-Affected Firms, for SMEs and midcaps that have solvency issues but are viable, using participating loans; iii) Also in Spain, a 15-year, EUR 9 billion total Support Fund for the Productive Industrial Investment (EUR 600 million a year), public financed, using regular debt, participative loans and equity, targeted at companies with industrial investment projects; iv) In Valencia, the regional development bank, Instituto Valenciano de Finanzas, has launched several financing programmes that use a participative loan to support SMEs and strategic Midcaps with an investment project, totalling EUR 400 million a year; v) The Netherlands launched an EUR 400 million SME subordinated loan support programme. 3.7.
To ensure effective deployment that reaches all MSMEs and has the maximum impact, the best operational scheme is one where there are multiple public and private originators and distributors, who might not be the same.
Originators include banks, asset managers as well as the public sector, whereas the investors can be the own banks, the public-sector or institutional investors (insurers and pension funds).
This framework refers to newly originated transactions, not the securitisation of existing ones.
This is, for example, what was done in France, with its Relance programme (15).
3.8.
Mitigation of potentially perceived risks of a hybrid loan scheme being distributed at scale across Europe:
Perceived risk
Solution
Supervising shadow banking
Including tools to manage risk, such as the credit rating, would remove the risk of shadow banking.
Crowding out banks
A hybrid loan instrument would restore the solvency of companies and banks would therefore be willing to keep lending to them.
Compatibility with Debt Equity Bias Reduction This initiative also seeks to avoid the over-indebtedness of companies, so Allowance (DEBRA) initiative it is compatible with the main objective of the DEBRA initiative.
Restoring solvency of non-viable companies
(15)
Introducing market standards such as the credit rating would prevent non-viable companies from accessing these instruments.
Many public programmes using participative loans have included this requirement.
Dispositif de garantie aux fonds de prêts participatifs et d’obligations subordonnées [French State Guarantee scheme for participative loan and subordinated bond funds], European Commission.