Siemens Energy replaces federal assurance with a new guarantee
Siemens Energy bids adieu to the federal government's backing for its mega projects, opting instead for a spanking new €9 billion financing deal. Gone is the old €11 billion guarantee, replaced by this fresh arrangement, according to a statement released on Thursday. This blowin'-in-the-wind facility, among other strings attached, will be the lifeline securing Siemens Energy's big-time business ventures moving forward.
The nitty-gritty of this arrangement: a five-year term, bankrolled by a swanky consortium of 23 international banks. Say goodbye to the federal government guarantee, and also to the €1 billion facility that Siemens AG had previously tucked under its belt.
What's the dealio with this change? Well, things looked a bit dire for Siemens Energy back in '23, making a government-backed guarantee a veritable lifesaver. Yet, thanks to a swift recovery and a favorable market climate over the past couple of years, the company's financial fortunes have taken a turn for the better. Now, they can rely on traditional banking channels to keep their business afloat, rather than clinging to the government's coattails.
Fun fact: guarantees in the industry are kind of like the insurance policies for advance payments, performance, or warranty commitments. And, guess what? They rarely trigger a claim, with a default rate hovering around the less-than-0.5 percent mark.
So, what does this shift mean for the bigwigs at Siemens Energy? Well, it's a testament to their enhanced financial firepower and health. They can strut their stuff without needing to lean on government assurances. Score one for the free market!
This shift towards traditional banking means Siemens Energy is now financed by a consortium of 23 international banks, worth €9 billion, replacing the €11 billion government guarantee. The company's improved financial standing, thanks to a recovery over the past years, allows them to operate independently in the energy industry, no longer relying on government backing.
