Italian bank OKs 6.3-bln-euro loan to carmaker Fiat-Chrysler

Xinhua News,ROME
2020-05-28 04:10

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ROME, May 27 (Xinhua) -- Italian-American carmaker Fiat-Chrysler got a much-needed boost after Italy's bank gave the approval to a 6.3-billion-euro (6.9-billion-U.S. dollar) loan to the company as it struggles amid coronavirus restrictions.

Banca Intesa Sanpaolo said in a statement Wednesday that it agreed to the loan that had been under negotiation since earlier this month.

But the bank will not be taking on all the risk associated with the loan. Up to 80 percent of the total is expected to be guaranteed by SACE (Italian Export Credit Agency).

Roberto Gualtieri, Italy's Minister of Economy and Finance, said last week that SACE's expected role in the loan means that when the money is paid back, the Italian state stands to earn 150 million euros (165 million U.S. dollars) in interest payments.

When the cash arrives, it will provide welcome liquidity for Fiat-Chrysler as it works through its merger deal with French rival Peugeot. Fiat-Chrysler had been suffering from a short-term cash shortage as production lines were stalled during Italy's national coronavirus lockdown. Car sales in Italy were down by 98 percent in April compared to the same period a year earlier.

Banca Intesa Sanpaolo said the credit line would be valid for up to three years.

Investors applauded the development, with Fiat-Chrysler's share price surging nearly 3 percent in trading on the Italian Stock Exchange in Milan on Wednesday. Shares were as much as 4.2 percent higher in mid-day trading Wednesday.

Despite the latest gains, Fiat-Chrysler shares are still down around 35 percent since mid-February. But they are now nearly 10 percent above their value in mid-March, their lowest point during the coronavirus lockdown. (1 euro = 1.10 U.S. dollars)
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