Spain’s not-so-bad bank still has much to prove 28 Mar 2014 State-backed entity Sareb, key to the cleanup of the Spanish financial system, has set itself up in record time. It made a small loss in its first year, and 2014 doesn’t look much easier with real estate prices still falling. The bad bank must up its game to make ends meet.
Orange faces strategic bind in Spain 21 Mar 2014 The French telco is caught between Telefonica and a strengthened Vodafone-Ono. Orange needs a bigger high-speed network in Spain. Buying $3.8 bln Jazztel would help, but it is expensive. That leaves riding off other networks, or taking a gamble on pulling back from “quad play”.
Euro zone periphery trade is running out of gas 20 Mar 2014 Investors keen on a recovery story have been piling into assets in Spain, Italy, Portugal and Greece. Some periphery assets now look expensive. Further gains need two conditions to be satisfied – politicians enacting more reforms and companies growing profits.
Inditex deserves to come back into fashion 19 Mar 2014 Slowing earnings and currency risks have upset investors. But 2013 results from the world’s top fashion retailer show its business model is intact. Stores have been revamped, Europe is recovering, and web sales are promising. Shares in the owner of Zara could rise further.
Vodafone’s pricey Ono deal is rescued by savings 17 Mar 2014 The UK mobile giant is paying 7.2 bln euros for Spain’s top cable firm. A punchy 10.5 times 2013 EBITDA was enough to stop Ono floating instead. Still, this makes strategic sense. It should stack up financially too - if Vodafone delivers cost savings worth a promised 2 bln euros.
Spain’s economic growth is robust – yet fragile 14 Mar 2014 After seven lean years, the Spanish economy is doing better than expected and looks set to beat current growth estimates. Yet fault lines remain, and show the need for both serious reforms and a sensible fiscal policy.
Bankia sale better for morale than for finance 28 Feb 2014 The placing of 7.5 pct of the Spanish bank by the state is an impressive testament to the country’s recovery. Increasing the free float makes sense, and the deal has been sensibly sized. But Madrid will struggle to recoup the 22 bln euros it sunk into the lender.
Panglossian view of euro zone debt has pitfalls 28 Feb 2014 Italian and Spanish bond yields are falling with German ones. Investors no longer view southern European debt purely through the prism of credit risk. That makes sense for now. But over-optimism may be unwise, especially if low-to-no inflation hampers debt-cutting.
Repsol makes the best out of bad YPF deal 26 Feb 2014 The Spanish oil group will get $5 bln from Argentina as compensation for the expropriation of its stake in YPF. It’s half what Repsol wanted and will be paid in government bonds. Still, the final deal enshrines that Repsol must ultimately receive the value Buenos Aires promises.
Spain’s BBVA keeps banking’s tech enemies close 21 Feb 2014 The lender believes Google and its ilk will wreak havoc on traditional banking. To defend itself, BBVA has paid $117 million for Simple, a U.S. mobile banking company. The deal increases the possibility that banking’s technological disruption will come from inside.
Spanish real estate offers some IPO drought relief 21 Feb 2014 Two property funds are planning Spain’s first IPOs since 2011. Investors would get a direct play on the recovery of the country’s real estate market. But prices keep falling and competition for deals is tough. Much still depends on managers’ ability to spot bargains.
Santander gains cheap foothold in France 19 Feb 2014 The Spanish bank is in talks to finance Peugeot’s future sales in 11 European countries as the French state leaves the carmaker’s finance arm. Santander gets access to millions of captive clients and some legacy loans at a discount. Peugeot will benefit from cheaper funding.
Spain’s job creation machine still needs major fix 18 Feb 2014 A global economic recovery means Spain is finally adding jobs. The government’s labour reforms have helped. But these fell short in a few key areas, notably in tackling long-term unemployment. It’s a drag on Spain’s recovery story.
Panama Canal heading towards silly global failure 6 Feb 2014 A dispute over cost overruns could stop the 70 pct complete expansion of the Panama Canal. That’s ludicrous. American ports have already invested to take the bigger ships the wider canal will allow. With arbitration stalled, it’s time for a strong mediator to step in.
Spanish banks’ diversity no longer a trump card 31 Jan 2014 Santander and BBVA shrugged off Spain’s crisis thanks to their substantial operations abroad. The domestic economy remains weak, but Spanish bad debt provisions are easing. The problem now is that emerging stalwarts like Brazil are becoming a drag, not a benefit.
Vodafone has upper hand in Spanish cable fight 30 Jan 2014 The mobile giant is vying with the acquisitive Liberty Global for Ono, the 7 bln euro Spanish cable group. Financial heft, strategic need and synergies all point to Vodafone winning again, as it did in Germany. But Spain is a tougher market so Vodafone needs to stay disciplined.
Panama Canal can and should avoid project meltdown 28 Jan 2014 Work has slowed down to a crawl over a cost overrun dispute. Both sides have a strong incentive to fix the problem. The key question is how to finance the remaining costs while an arbitrator decides who owes what. Any solution is likely to pile more risk on the contractors.
Doom loop worked a treat for Spanish banks 24 Jan 2014 The recent government bond rally has been a godsend for Spanish lenders. But the carry trade has a limited shelf life and Spanish banks will have to seek profits elsewhere. With demand for credit still weak in Spain, that looks tough.
Too soon for Madrid to untangle itself from Bankia 15 Jan 2014 It’s logical for Spain to mull a partial sale of its biggest bank mess. Spanish bank shares have rallied, the government is keen for a success story, and a small sale could work. But Madrid might have a better chance of recouping its money once Bankia finishes its turnaround.
Spanish royal ruckus comes at terrible time 13 Jan 2014 Spain’s democracy is strong enough to question a princess on tax-evasion charges. But widespread corruption among the masses will be harder to fight if the elite is under suspicion. And the royal family loses respect just when the country most needs a stable national institution.