Peugeot State guarantee wins approval

PSA Peugeot Citroen's finance arm was granted temporary European Union approval to receive a French government guarantee backing the issuance €1.2 billion of new bonds.

Peugeot must submit a restructuring plan covering the entire group to win final approval for the guarantee covering Banque PSA Finance's three-year bonds, the European Commission said today in an e-mailed statement.

The EU said the guarantee was necessary to ensure the Peugeot unit's access to financial markets and avoid any contagion to the French banking system which could affect bank financing.

The ailing French carmaker has had to write down the value of its automotive assets by €3.9 billion because of the parlous state of its European markets, meaning 2012 net losses could be about €6 billion.

Bloomberg