The biggest drops were registered in areas like the manufacture of coke oven products and in the refinement of petroleum (-11.2%), Metallurgy ( -6.5%) and Food and beverage products industry (-1.1%). In contrast prices for electricity and gas continued to rise (4.4%). Consumer goods droppped by –0.4% on the month (a 0.1% rise for durable consumer goods and – 0.5% for non-durable consumer goods), while capital goods cost still rose (0.1%), while intermediate goods (-1.5%) and energy (-2.9%) both fell. If we look at the producer price index itself, we will see that (just as is the case with the consumer price index) the peak was hit in June and we are now coming down. It seems pretty clear to me at least the likelihood of Spain entering a price deflation dynamic in 2009 is now strong.
Mortgage Lending Drops An Annual 31.5%
According to the latest data from the INE, the number of new mortgages issued in Spain in September (100,868) was 31.5% down on September 2007. The value of new mortgages was down by 35.4%.
The average value of new mortgages was also down - by 5.7%.
Obviously September was a pretty key month in the evolution of the Spanish crisis, and construction activity itself was also down by an annual 24.1%.
The Repsol Saga Continues
The capacity of the Spanish means of communication to treat even the most important life and death issues for the Spanish economy as if they were just another "Dallas Style" soap opera, never ceases to amaze me. As I explain in this post at some considerable length, when you are effectively facing national bankruptcy you just can't afford to be that choosy about who you get into bed with. The basic facts of the case are that to get out from under the debt they have associated with their Repsol stake Sacyr need to receive something like the quantity they initially paid, and with shares at near half of that value it isn't too clear who apart from Lukoil (and maybe not even Lukoil now) would be prepared to pay anything like that prices. So I think people would do better to lock their emotions in the wardrobe and take a long cold look at the real alternatives facing Spain's government, corporates and banks, because basically none of them look especially attractive at this point.
Nonetheless the saga continues (some papers seem to have been even trying to involve the King in the affair - un poco de picante nunca va mal) and Prime Minister Jose Luis Rodriguez Zapatero told Parliament yesterday that while he didn't intent to block the sale the Sacyr stake to OAO Lukoil, “the government will defend the Spanish nature of Repsol,” Zapatero said today. This would seem to mean to me that they would be willing to offer the Sacyr part, but that La Caixa may not sell, thus avoiding Lukoil being able to gain a 30% share and make a bid for the whole company, but in this case it isn't clear how they are going to sustain Lukoil's interest, and thus the show goes on. They better move pretty rapidly though, since the stricter terms on the Sacyr loan come into force at the end of December.
The stake in Repsol, the supplier of 42 percent of Spain’s oil, is up for sale because Sacyr Vallehermoso SA, the Spanish builder whose debt is six times its market value, must repay more than 2 billion euros in loans by 2010 as the nation’s housing slump deepens. Lukoil, which owns oil-producing assets in Siberia, is adding refining capacity in the Mediterranean to process its crude.
Metrovacesa in Talks With HSBC
Metrovacesa, which is Spain’s biggest property developer, is reportedly in talks to sell HSBC Holdings' headquarters in London back to the bank as its loan on the building comes due today (Thursday). Metrovacesa borrowed 800 million pounds ($1.2 billion) from HSBC last year for the 1.09 billion-pound purchase of the 45-story tower in the Canary Wharf financial district. The loan matures today, and the company hasn’t been able to refinance apparently. Negotiations on the price HSBC would pay in the event of a deal remain open at this point.
The acquisition of the 210-meter (689-foot) tower, at the peak of the U.K. property boom in April 2007, was the U.K. capital’s most-expensive single property transaction ever. Commercial property values in central London have fallen about 32 percent since then, according to Investment Property Databank Ltd.
Metrovacesa accumulated debt of 7.1 billion euros by acquiring properties across Europe. The Sanahuja family, who own more than 80 percent of Metrovacesa, was in talks with lenders including Royal Bank of Scotland Group Plc and may give them more than 50 percent of the company to cancel debt, according to a statement on Nov. 6. Alternatively or in addition, the family may offer assets as collateral for the next three years, the statement showed.
EU Confidence Index Hits 23 Year Low
Yet another measure of how EU consumers and businesses feel about the economic outlook fell to an all-time low this month. The EU economic sentiment indicator tumbled to 70.5 points in November from 77.2 in October, hitting the lowest level since the survey was created in January 1985.
Meanwhile, the EC's eurozone economic sentiment indicator fell to 74.9 points in November from 80.0 points in October, dropping to its lowest level since August 1993. 'Reflecting the widespread deterioration in economic sentiment, all EU countries reported weakening sentiment,' the commission said. The EC's separate monthly business climate indicator for the eurozone retreated to the lowest level since October 1993, dropping to a negative 2.14 points in November from a negative 1.34 in October.
Habitat Throws The Towel In
According to Barcelona newspaper L'Avanguardia this morning, property delevoper Habitat - who have an estimated 1.5 billion euros of net debt - has decided (according to reports) to enter some form of judicial administration (during the next two weeks according to the paper - those of you who understand Spanish see below). The developer had been unsuccessfully trying to get an agreement from creditors on a debt restructuring following the rejection of a 900 million euro capital increase proposal by shareholders at a meeting held at the end of last month.
Habitat ha decidido presentar concurso de acreedores, una medida que se formalizará en las próximas semanas, confirmaron ayer fuentes financieras y jurídicas. La compañía inmobiliaria no quiso efectuar ningún comentario. La demanda para pedir al juez que declare la insolvencia ya está preparada por el despacho Uría Menéndez y, salvo un improbable cambio de parecer, se llevará a los juzgados durante la primera quincena del próximo mes de diciembre. La deuda de Habitat supera los 1.500 millones. La decisión de la inmobiliaria se produce justo un mes después de la celebración de la junta de accionistas, en la que no salió adelante la propuesta del consejo de ampliar capital para restablecer el equilibrio patrimonial del grupo, dañado por las elevadas pérdidas. Desde esa junta, el consejo de administración de Habitat tenía dos meses para encontrar nuevos fondos, presentar concurso o liquidar directamente la empresa. ...