Spain looking to cut corners on bank bailout 24 Sep 2012 Madrid will soon get 100 billion euros to recapitalise the country’s ailing banks, but hints it may end up only using 60 billion. Spain doesn’t seem to grasp that it must be conservative to be credible. Some of its current assumptions look way too optimistic.
Spanish reform push aims at stigma-free bailout 21 Sep 2012 Madrid fears that an abject call for ECB help would hurt national pride. It’s more dignified to take a multi-year reform plan to the central bank’s new bond-buying window. But falling Spanish yields may make Germany feel that Spain doesn’t need the ECB’s help.
ECB bazooka eases peripheral bond doom loop 13 Sep 2012 Investors are snapping up peripheral corporate debt after the ECB’s pledge to stamp out euro breakup fears - even Telefonica’s. That lightens pressure on issuers’ banks and, in turn, their sovereigns. But the interplay between issuer and sovereign isn’t yet a virtuous circle.
Santander can teach Citi the art of breaking up 10 Sep 2012 The notion of a Spanish bank instructing the rest of the world on anything may sound, well, loco at present. But Santander’s methodical IPOs of operating units, the latest due in Mexico, present a reasonable model for an undervalued colossus like Citi to consider.
Hugo Dixon: Spain and Italy mustn’t blow ECB plan 10 Sep 2012 Mario Draghi’s bond-buying scheme has bought Madrid and Rome time to stabilise their finances. But if they drag their heels, the market will sniff them out. It will then be almost impossible to come up with another scheme to rescue them - and the single currency.
Spanish mortgage bottom-fishing only for the brave 3 Sep 2012 Investors hope for juicy yields buying beaten-up covered bonds secured on Spanish mortgages. Losses would need to reach apocalyptic levels for investors to suffer. But no one can really tell what would happen in a covered bond default.
Spain’s hasty DIY Bankia recap smells fishy 3 Sep 2012 The Spanish bank is being bailed out after losing 4.4 bln euros in the first half of 2012. Yet Madrid is recapitalising Bankia itself instead of using euro zone cash. EU political maneuvering may explain why. But it could also be an attempt to avoid hitting Bankia’s creditors.
Moody’s keeps euro zone bailout 2.0 on trial 31 Aug 2012 The agency’s decision to delay a potential Spanish downgrade reduces the danger of a junk rating that would spook markets. Moody’s wants to see if the new bailout-lite, complete with ECB bond buying, can revive investor confidence. That keeps Spain - and the ECB - under pressure.
Catalonia tests Spain’s flawed regional model 24 Aug 2012 The fiscal woes of Spain’s regions could make it miss its deficit targets. But profligacy only tells part of the story. Catalonia, now pushing for greater fiscal independence, is the clearest example of why the semi-autonomous provinces model needs a revamp.
Italy still vulnerable to Spanish flu 22 Aug 2012 Italy could avoid Spain’s bailout shame. Mario Monti is intent on more reforms and privatisations. If investors think that Italy is on the right track, they might view Spain’s bailout as a trigger to buy its bonds. But next year’s election remains a big question mark.
Spanish banks next for Greek-style ECB shakedown 20 Aug 2012 Spain’s lenders may already be using their central bank’s liquidity support. The ECB has submitted Greek banks to the same treatment. The longer Madrid has to wait for its bailout cash, the more use of so-called emergency liquidity assistance could spiral.
Spain tries to spare its retail bank investors 15 Aug 2012 Preference shareholders in Spain’s bailed-out banks could get a haircut, but high coupons would later offset their loss. The government would be spared the political fallout of burning the cajas’ retail investors - but at the cost of weakening burden-sharing.
Spain’s bad bank valuation looks ripe for fiddling 13 Aug 2012 Madrid wants to fix its lenders by selling their assets to a bad bank. Ireland’s efforts in 2009 to price duff loans before offloading them to its version, NAMA, provide a handy valuation template. But they also suggest ways in which the process can be manipulated.
How to afford bailouts for Italy and Spain 8 Aug 2012 Until now, markets had assumed that Rome and Madrid were too big to bail. But the European Central Bank’s pledge to restart bond buying for countries that seek help could keep the bill below 300 billion euros. That would make rescuing the countries a bit easier.
Enel squeezes its Latam minority shareholders 27 Jul 2012 The troubled Italian utility is using an $8 bln capital hike at its Chilean unit Enersis to grow in the region. While Enel’s Spanish arm Endesa kicks in assets to cover its 60 pct portion, minority holders must stump up cash. They may be powerless but the reaction speaks volumes.
Spain’s global banks are still hostage to Spanic 26 Jul 2012 Santander and BBVA have been rocks in a storm thanks to overseas profits. But they remain vulnerable. A downgrade of Spain to junk would be painful. If the banks really were quasi-supranational, the shares wouldn’t rally so much when the ECB president makes supportive noises.
Telefonica payouts may go on hold for longer 26 Jul 2012 The Spanish telco has finally scrapped this year’s dividends and buybacks. That’s sensible as Spain’s financial crisis deepens: the group could now cope with being shut out of the bond markets for a long stretch. But a pledge to reinstate dividends in 2013 looks optimistic.
Capital flight will decide course of the "Spanic" 24 Jul 2012 Madrid can withstand the market panic until October when big bond repayments are due, provided it doesn’t spill over into the banking system. But if capital flight accelerates, policymakers will have to break their holidays and concoct a full bailout. The politics won’t be easy.
Hugo Dixon: Confidence tricks for the euro zone 23 Jul 2012 The euro’s crisis of confidence operates at multiple levels. Businesses, bankers, citizens and politicians are losing faith in both the economy and the whole project. That creates multiple vicious spirals, centred on Spain and Italy. But there’s a way to escape the vortex.
EU seals fate of Spanish savings banks 23 Jul 2012 As part of the country’s bailout, the euro zone wants Spain’s cajas to cede control of their banking arms. Even Caixabank - the great survivor - will eventually look more like its commercial rivals. The purge will be good for the financial sector, and for corporate Spain.