The exit process was conducted gradually, Dexia waiving the benefit of the guarantee for contracts with a maturity of up to one month and contracts with no fixed maturity as early as October 2009.
On 5 February 2010, the States of Belgium, France and Luxembourg came to an agreement with the European Commission on Dexia's restructuring plan. As part of this agreement and given the improvement of its liquidity position, Dexia was to exit the guarantee mechanism four months earlier than the agreed expiry date of 30 October 2010. Therefore, the Group undertook to stop the issuance of short-term guaranteed instruments by the end of May 2010 and of all medium to long-term guaranteed debt by 30 June 2010.
All outstanding instruments issued under the government guarantee framework before 30 June 2010 will continue to benefit from the government guarantee in accordance with their terms and conditions.
Outstanding guaranteed debt is primarily used to finance the Group's Legacy Division, due to be downsized substantially between now and 2014 by virtue of major deleveraging efforts.
As at 30 June 2010, Dexia raised EUR 35.5 billion medium and long-term debt, of which EUR 23.2 billion under the guarantee framework in anticipation of the exit from the guarantee and EUR 9.6 billion in long-dated covered bonds with an average maturity close to 9 years. Dexia's 2010 long-term funding target is therefore close to completion.
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