toxic loans: Lyon and the Rhone are a check for 425 million euros – Les Echos

The city of Lyon and the Rhône department come again to offload 425 million. Ques is the justification for such an expense? The two authorities have announced their intention to settle the “structured” bonds whose rates had soared out of control.

This represents the prepayment penalty of three loans whose interest rate was fixed on the Swiss franc. It is significantly higher than the stock of three loans concerned, which is of the order of 217 million euros.

A legacy of the former department

with the decision in January 2015, the Swiss national Bank to let its currency appreciate freely against the euro, the rates paid on these loans jumped to, for one of them, more than 20% a year.

These three loans were inherited from the former department of the Rhone. With the creation of the city of Lyon, which took over some functions of the former General Council, such actions were transferred to 65% in the city and 35% to the department of “new” Rhone.

the state will pay 148 million to the city

the decision to repay these loans ends the various judicial proceedings. “Of two evils, we chose the least,” summarized the Deputy Finance of the metropolis, Richard Brumm, stressing that contesting these loans to justice, the two communities were exposed to legal uncertainty – the ” jurisprudence rendered do we were hardly favorable. ” In addition, a decision could be expected for several years, yet during this period the interest on these loans “toxic” would have continued to run.

The net cost of the renegotiation will be lower since the State will pay 148 million in the city and 80 million in the department through its compensation fund government loans “toxic”. These amounts will be paid in annual installments during the lifetime of the loans. The net cost of the deal is $ 127 million for the city and 69 million for the department, argued the President of the metropolis Gérard Collomb (PS) and its counterpart in the Rhône Christophe Guilloteau (LR).

the two communities also had to refinance the principal of these loans. Because Lyon has chosen to prepay 95.6 million on its cash, the city has got very favorable rates between 0.50% and 0.69% per annum. The department is he refinanced at 3.25%. Gérard Collomb and Christophe Guilloteau have also ensured that the settlement of this dispute would not lead to increased local taxation

AFP Source

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