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Resolution Of June 1, 1998, Of The General Direction Of Treasury And Financial Policy, That The Issuance Of Government Debt Are Available In Ecus And Establishes The Procedure Of Issuance.

Original Language Title: Resolución de 1 de junio de 1998, de la Dirección General del Tesoro y Política Financiera, por la que se dispone la emisión de deuda del Estado en ECUs y se establece el procedimiento de emisión.

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Royal Decree 68/1998 of 23 January, which provides for the creation of Public Debt in 1998, authorizes the Minister of Economy and Finance to issue State Debt during 1998. Article 2 (c) authorizes the creation of a State Debt for the purposes of issuing it on the domestic market which allows investors to become familiar with the euro.

Article 104 of the General Budget Law empowers the Minister of Economy and Finance to use, for the placement of issues of negotiable securities of Public Debt, any technique that does not involve an inequality of opportunities for potential acquirers of the same, depending on their nature and functions. In particular, in paragraph d) it provides that the issue may be auctioned to the general public, to authorised colocators or to a restricted group of persons who acquire special commitments in respect of the placement of the debt or the functioning of its markets.

The Order of the Minister of Economy and Finance of January 26, 1998, which provides for the creation of State Debt during 1998 and January 1999 and delegated certain powers to the Director General of the Treasury and Policy In paragraph 8.4 of the Financial Regulation, the Commission has delegated to the Minister for Economic and Financial Affairs the power of the Minister for Economic Affairs and Finance in Article 104 of the General Budget Law.

For its part, the Order of 24 July 1991, as amended by the 29 March 1994, regulates the figure of the 'Debt Market Creator', establishing special commitments for the placement of debt or for the operation of the market. of their markets which such institutions must assume and the profits which they derive from it.

Finally, the Order of the Minister of Economy and Finance of 19 June 1997 authorizes the Directorate General of the Treasury and Financial Policy to issue segregated bonds, establishing that they will receive such a rating. which are expressly declared as such in the relevant resolution of the Directorate-General of the Treasury and Financial Policy.

By virtue of the above, I have resolved:

1. Dispose of the issuance of State Debt in ECUs, following the procedures set out in this Resolution.

2. The State Debt in ECUs that is issued in accordance with the provisions of this Resolution shall be referred to as "State Obligations in ECUs-Euros".

3. Representation of the Debt. -The State Obligations in ECUs-Euros will be represented exclusively by means of annotations in account and will be registered in the Central of the Annotations.

4. Other features.

4.1 The State Obligations in ECUs-Euros will have a nominal unit value of 1,000 ECUs. They will be issued through competitive monthly auctions which will be held on the third Tuesday of each month between June and December of this year.

4.2 The State Obligations in ECUs-Euros will be classified as segregable. As a result, the tax treatment of the State Obligations in ECUs-Euros will be established in general for the Segregable Debt. However, the operations of segregation and reconstitution may only be carried out from the moment when the Directorate-General of the Treasury and Financial Policy authorizes it by means of a corresponding resolution.

4.3 The State Obligations in ECUs-Euros will be consolidated with the State Obligations issued in pesetas with the same maturity date and the same nominal interest rate. The consolidation will take place during the month of February 1999, once the Central Bank has adopted the euro as a unit of account. From that moment on, the State Obligations in ECUs-Euros will be identified by the same code value assigned originally by the Central of Annotations to the Obligations of the State in pesetas with which those will be consolidated. The exact date of the consolidation will be announced by resolution of the Directorate General of the Treasury and Financial Policy.

4.4 The settlement and clearing of transactions on the State Obligations in ECUs-Euros to be carried out before the consolidation referred to in the previous paragraph takes place through Euroclear Operations Centre, a subsidiary of Morgan Guaranty Trust Company (hereinafter Euroclear).

5. Subscription procedure.

5.1 The Banco de España will act as a Public Treasury agent in the issuance and management of the State Obligations in ECU-Euros, organizing the corresponding auctions and receiving and processing the requests of the entities.

5.2 The State Obligations in ECUs-Euros will be issued through competitive auctions that will be developed as provided for in paragraphs 5.3 to 5.8 of the Order of the Minister of Economy and Finance of 26 January 1998. The creation of State Debt during 1998 and January 1999, with the following particularities:

(a) Only entities may submit requests for subscription which, on the date of the conclusion of the corresponding auction, have recognized the status of the Creator of the Public Debt Market in Annotations.

b) Only competitive bids may be submitted. The price shall be expressed as a percentage of the nominal value with two decimal places, the last of which shall be zero or five. Tenders which do not specify the requested price, or do so in a manner other than that described in this paragraph, shall be considered null and void for all purposes.

(c) Each offer shall be made for a minimum nominal amount of ECUs 100,000. Applications for higher nominal amounts shall be multiples of the minimum amount.

d) The bids shall include the social reason of the petitioner. Prior to the referral of requests, the market makers must inform the Central of the Log of the account data in Euroclear in which the securities will be deposited. In particular, the full identity of the account holder must be specified in Euroclear.

e) The tenders shall be sent by the same means through which the tenders are sent in the auctions of Debt of the State in pesetas to the Central of Annotations between the nine and the ten thirty hours of the day of celebration of the auction.

(f) The resolution of the auction shall be carried out in accordance with the procedure laid down in paragraph 5.8.2 of the Order of 26 January 1998.

g) Finished the deadline for submission of requests for the auction, a post-auction subscription period will open, in which the requests must come expressed as multiples of the unit nominal value of the Obligations. This period will consist of two phases:

1) First phase: Each entity may be awarded at most, and upon submission of the corresponding request, the amount resulting from the application of its quota-calculated to three decimal places-in the award at the the auction of the last two issues-including the one currently being developed-at 10 per 100 of the average value between the expected and maximum amounts, that is, those that the Treasury would have announced as placement targets for that auction. In the first issue, the share of each entity shall be that resulting from its award at the auction stage that is being held at the time. The price to pay will be the minimum accepted at the auction. These requests may be submitted between ten and eleven thirty hours on the day of the auction.

2) Second phase: After the submission of the corresponding requests, each entity may be awarded, at the rounded weighted average price resulting from the auction, the amount resulting from the application of its quota-calculated with three decimal places-in the last two auctions-including the one that has just been held-at 15 per 100 of the nominal amount awarded. In the first auction the quota of each entity will be that of the auction that is being held in those moments, whose deadline of submission of applications was closed at ten thirty hours. The period of submission of petitions in this second post-auction phase shall be extended from the moment after the auction resolution until 10 thirty hours on the third working day following the conclusion of the auction.

6. Putting into circulation the values and disbursement of the amount awarded at the auction.

6.1 The date of issue of the State Obligations in ECUs-Euros will be the fifth business day after the corresponding auction. The nominal amount of the issue will be entered initially in the Bank of Spain account in Euroclear, thus appearing in the Annotations Central as part of the balance of third parties of the "Banco de Santander, Sociedad Anonima", custodian of Euroclear in Spain.

6.2 On that same date, the Banco de España will proceed to deliver, against payment, the securities to the successful bidders in the accounts they have designated in Euroclear. The Bank of Spain will then pay the amount of the issue to the Treasury.

6.3 Both Banco de España and the auctioneers of the auction will have to process their delivery instructions against payment at Euroclear the day before the date of issue, with a date value the following day.

6.4 As long as the consolidation of emissions referred to in point 4.3 above does not occur, the Banco de España will maintain its status as a payment agent for the Treasury, using its account in Euroclear. In this case, in each interest payment, the market makers must forward to the Annotation Central the relations of holders of the State Obligations in ECUs-Euros in the form established for the Debt Segregable by the Order of the Minister for Economic Affairs and Finance of 19 June 1997.

7. Clearing and settlement mechanisms.

7.1 Operations made with State Obligations in ECUs-Euros will be offset and liquidated exclusively in Euroclear until its consolidation occurs.

7.2 Until the consolidation of the State Obligations in ECUs-Euros with the corresponding debt reference of the State issued in pesetas and re-denominated to euro, those will always be recorded in the Euroclear depositors accounts.

7.3 Market makers must keep records at all times of the holders of the securities they hold in their account at Euroclear.

8. Trading and trading systems.

8.1 The State Obligations in ECUs-Euros will be able to be negotiated in the network of Mediators between Negotiators of the Annotated Debt, both in the segment known as the "blind market" and in the second step.

8.2 Once a transaction has been agreed, the two parties-buyer and seller-will inform Euroclear to make the corresponding annotations on their system.

8.3 The members of the network of Mediators between the Annotated Debt Negotiations will report to the Bank of Spain on a daily basis. This information will collect both the trading volumes and the average prices and yields.

8.4 In no case will the movements resulting from a negotiation of State Obligations in ECUs-Euros be processed through the Money Market Telephone Service.

9. Announcement of the auctions.-The Directorate-General of the Treasury and Financial Policy will announce, by resolution, the call for auctions of securities whose issuance regulates this standard.

Madrid, June 1, 1998. -Director General, Jaime Caruana Lacorte.