KME - comment
For over two years we have been told about a possible line of credit from the Italian export credit agency (SACE) to support KME. It has finally arrived, but rather than improve liquidity it will replace the €75m reduction in the bank LC facility announced last week. We had hoped that any SACE facility would increase borrowing capacity. Our model shows that KME needs either additional facilities or lower volumes and nothing in the last 2-weeks has changed this, facilities are just back at €395m, with the banks swapping out some KME/Copper risk for Italian State risk.
- We expect the line to operate in the same way as the existing LC lines but with the Italian state being the ultimate risk to any LCs drawn under it.