Hypo Real Estate Group (Hypo RE) announced earlier today that it would be receiving an additional €10 billion in guarantee funds from the German Financial Markets Stabilisation Fund (SoFFin). The new framework agreement will expire on June 12, 2009.
Hypo Real Estate Bank AG, part of Hypo RE, will use the guarantee framework to collateralize debt securities to be issued by the bank, which are due for repayment by May 14, 2009. The bank will pay to SoFFin a pro-rata commitment commission of 0.1% on the undrawn portion of the framework guarantee, and a 0.5% annual fee on guarantees drawn upon.
The new framework agreement comes amidst weeks-long discussions regarding the possible nationalization of Hypo Real Estate Holding AG, although news sources indicate that no agreement on that point has been reached. Both the German government and Hypo RE acknowledge that negotiations between Hypo RE and SoFFin regarding more extensive and longer-term liquidity and capital support measures have not yet been finalized.