P&R secures £225m. credit facility to fund virus financial support

The Policy & Resources Committee has finalised the agreement with a consortium of five banks following the States' resolution to borrow up to £250m. to meet short-term cash requirements following the Covid-19 pandemic.

Lockdown had a significant financial impact on the States because tax revenues fell as business profits eroded and unemployment levels rose.

The States’ cash-flow was simultaneously impacted by the deferral of payments such as social insurance, commercial TRP and rent payments to support businesses.

P&R believed the facility should provide ‘sufficient headroom’ to cover financial support measures for individuals and businesses alike, which it expected would need to continue for some time. This flexible borrowing arrangement will allow the States to draw up to the £225m. limit on demand to meet these needs.

Interest will be paid on the amount drawn down and a considerably smaller non-utilisation fee will be paid on the amount not drawn down.

Lyndon Trott, vice-president of the Policy & Resources Committee, who has led Guernsey’s financial response, said securing the facility was an important step in battling the financial collateral damage of Covid-19.

‘I’m very pleased that we’ve been able to secure this facility so quickly and my thanks go to the five banks who are working with us to ensure that we have the liquidity we need to fund these essential measures which are supporting our community through this crisis,’ he said.

‘They’ve recognised the urgency and importance of what we’re doing in the spirit of Guernsey Together.’

The funds will be provided jointly by Barclays Bank, Butterfield Bank, HSBC, Lloyds Bank International and The Royal Bank of Scotland International.

The process for putting the facility in place was led by Treasury and the Law Officers of the Crown, with advice from the UK Debt Advisory team at EY, and legal counsel provided by local firm Carey Olsen and in the UK by Slaughter and May.