Spain

Sacyr faces steep cost of botched diversification

14 Dec 2011

The Spanish construction group must repay by next week the 4.9 billion euro margin loan it took out to finance a 20 percent stake in Repsol. With the investment underwater, there is no easy way to do it. The banks hold the whip, but they will probably have to share some pain.

Supersized IMF not just for little guy bailouts

9 Dec 2011

Europe’s promise to lend another $270 bln takes the fund’s pot over $1 trln. The move also raises the chance of fat contributions from the BRICs, who have insisted on more euro zone self-help. The muscled-up fund may soon have the scale to help rescue big nations like Spain.

Latin America gets closer even as Europe cracks

8 Dec 2011

Cross-border deals among South American companies, like Chilean CorpBanca’s purchase of Santander Colombia, set a new record in 2011. A single Latin currency seems remote given the euro’s woes. But as the region’s private sector consolidates, it can’t be ruled out for ever.

Spanish banking sector to pay for its sins

8 Dec 2011

Banco Sabadell is taking troubled lender CAM off Madrid’s hands, and Spain’s bank-backed deposit guarantee fund is helping by making a big capital injection. Such deals minimise the cost to the taxpayer, but aren’t a free lunch for the state and won’t solve the sector’s problems.

Piecemeal solution would suit bust Spanish caja

2 Dec 2011

Sabadell was the only bank that made an offer for CAM, after other bidders backed out. Now Spain’s central bank must decide whether it sells the caja with all sorts of expensive guarantees. Alternatively, it could sell the good parts. This option may be the least painful.

Euro IMF scheme raises four questions

1 Dec 2011

The latest wheeze for solving the crisis is for national central banks to lend money to the IMF which will then pass it to Italy and possibly Spain. But how much money will be available, who will provide it, where will they get it or who will bear the risk?

Italy, Spain may be best off with fast trip to IMF

28 Nov 2011

If market confidence can’t be restored rapidly, Monti and Rajoy – the countries’ new PMs – should consider asking for help while they can still blame their predecessors. The snag is the IMF doesn’t have enough cash. So its resources would need beefing up, probably by the ECB.

Spain SA braces for change in political guard

25 Nov 2011

Unlike the outgoing socialists, the conservative party was notorious for its interventionism when it was in power in the 1990s. Much has changed since then. But the new government will inevitably have a greater say – particularly with the banks.

Santander’s stingy bond swap a sign of the times

23 Nov 2011

The Spanish lender’s plan to exchange junior debt for less attractive senior paper may be unpalatable for bondholders. But holding out isn’t much more attractive. With EU lenders under pressure to boost capital and refinancing rates high, investors had better get used to it.

Spain’s next government: now for the hard part

21 Nov 2011

Mariano Rajoy’s People’s Party has won an absolute majority. The new prime minister has made all the right commitments, but markets are sceptical. He needs to show he’s serious even before he takes office in a month. He – and the markets – also need support from the ECB.

How to fix Spain’s real estate problem

18 Nov 2011

The country’s main opposition party is mulling the creation of a state-backed bad bank to deal with dud real estate loans. This approach has worked elsewhere. But the government can force entities to own up to losses without saddling taxpayers with the dross.

Spanish debt storm piles the pressure on Rajoy

16 Nov 2011

At current yields, Spain would need a primary surplus of 1.8 percent just to keep its debt/GDP stable in the long run, according to a Breakingviews calculator. Madrid is forecast to have a deficit of 3.5 percent in 2012. The next PM will need to re-establish confidence fast.

Spanish campaign can’t keep ignoring euro crisis

8 Nov 2011

A televised debate this week between the two contenders for the Spanish prime minister’s job only made passing reference to the euro zone crisis, even as it engulfs Italy. Spain should realise it is beholden to forces outside its borders.

Spain isn’t as uncompetitive as you think

31 Oct 2011

The country’s unemployment rate scales new heights even as Spain’s exporters seem surprisingly resilient. The snag is that there aren’t enough of them to get the country growing again.

EU bank recap too blunt an instrument for Spain

26 Oct 2011

Europe wants lenders to reach a 9 percent core Tier 1 capital ratio and take haircuts on sovereign debt. But the problem with Spanish banks is their exposure to real estate, not government debt. Forcing only big groups to raise capital also misses the point.

Spain hasn’t seen the end of its pain

21 Oct 2011

Profligate regions may push the country’s budget deficit above the 6 percent-of-GDP target. The electoral cycle isn’t helping. A minor slippage doesn’t matter much, but in the current slump, anything more than a percentage point will make next year’s goals particularly challenging.

Spanish bank mergers off to inauspicious start

11 Oct 2011

Banco Popular is paying a steep price for rival Banco Pastor. The 1.3 bln euro deal doesn’t lift the mid-sized lender into the big league and does little to strengthen its balance sheet. It’s a reminder that while more consolidation is inevitable, not all investors will benefit.

Wall Street dealmakers get trampled by PIIGS

10 Oct 2011

The fear and uncertainty over Europe has sent the cost of U.S. credit skyward. By one closely watched gauge, junk bonds are yielding almost five percentage points more than they reasonably should. Given the bureaucratic dithering, bankers and buyout barons may be idle for a while.

BAA sale removes yoke from Ferrovial’s neck

10 Oct 2011

The Spanish construction firm has sold a small stake in airport group BAA at a big price. The value put on BAA by the 325 mln euro deal is more than double consensus. And giving up majority ownership will deconsolidate 14 bln euros of debt. At last, BAA is no longer a drag.

Spain’s next leader keeps investors guessing

7 Oct 2011

The country’s probable next PM talks the right talk in focusing on jobs and the economy. His party, which may wield unprecedented power, seems to understand how serious the crisis is. But it’s still unclear whether they will opt for a swift and radical reform agenda once in power.