UPDATE 1-Swedish Debt Office to guarantee credit for firms facing virus crisis

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STOCKHOLM, March 27 (Reuters) - The Swedish government has authorized the Debt Office to establish state credit guarantees to cover up to 70% of the risk for loans to companies that are financially impacted by the coronavirus, the manager of Sweden’s debt said on Friday.

Under the scheme, the Debt Office will provide guarantees to the banks which, in turn, issue guaranteed loans to companies. The firms making use of the guarantees can apply for loans of up to 75 million Swedish crowns ($7.5 mln).

“The guarantee programme entails that the central government facilitates the process for viable companies of managing the pandemic,” Debt Office Director General Hans Lindblad said in a statement.

“The mandate is extensive, and the Debt Office is now working very swiftly to set up the guarantee framework and thereby support the Swedish economy.”

The credit programme is intended to cover loans to primarily small and medium-sized companies that have experienced financial difficulties because of the new coronavirus but are otherwise robust, the Debt Office said.

To qualify the companies must be non-financial and with their main operations or domicile in Sweden.

Sweden’s central bank has started an asset purchase programme and offered to loan 500 billion Swedish crowns ($50 billion) to companies through the banking system. ($1 = 10.0004 Swedish crowns) (Reporting by Johan Ahlander; editing by Niklas Pollard)