Spain Real Time Data Charts

Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Spain related comment. He also maintains a collection of constantly updated Spain charts with short updates on a Storify dedicated page Spain's Economic Recovery - Glass Half Full or Glass Half Empty?

Tuesday, February 10, 2009

New Spanish House Prices Estimate From Tinsa

This is much more like it:

House prices in Spain could drop 20 percent this year after falling 10.8 percent in January year-on-year, as sellers compete in a saturated property market, surveyors Tinsa said on Tuesday. "(Housing) stock is going to continue to stack up because the number of homes being finished is larger than the number of homes which are successfully sold," Tinsa's managing director Luis Leirado told a news conference. The average price per square metre was 2,044 euros ($2,649) in January, down from 2,273 euros the same month a year ago. "The price is falling between 1.2 and 1.4 percent a month," Leirado said. "If we continue at this rate, we could find ourselves with a fall of 20 percent (by the end of the year)." At the end of 2008, the number of unsold homes stood at almost a million and could rise to 1.15 million by the end of this year, Leirado said. Spanish banks are also trying to sell homes they have acquired from property companies in exchange for debt, or homes repossessed as the economic slowdown has driven unemployment to about 14 percent.

Now pencil in another 20% fall in 2010 (and no rebound) and the house price adjustment part of the current correction could be about done in my opinion. Get you calculators out and start doing the numbers!

New Bankruptcy Law In the Offing

A new bankruptcy law is in the works:

Spain is to unveil a new law to speed up the administration process for ailing companies and to protect debt-repayment deals struck between banks and firms filing for creditor protection, Expansion reported on Tuesday. The reform of Spain's bankruptcy law would give greater certainty to banks which until now could find refinancing deals signed with companies suspended or overturned by the courts, said the paper, without citing its sources.

The financial daily said Spanish Prime Minister Jose Luis Rodriguez Zapatero could announce the law to parliament on Tuesday. Last month, consultants PriceWaterhouseCoopers said the number of Spanish firms filing for bankruptcy protection almost tripled last year as builders and real estate developers went bust at record pace.It said 2,864 firms filed for administration last year, 1,849 more than in 2007, and warned that if the high rate of filings of the final quarter of 2008 continued this year it could collapse the commercial courts.

Cuts In Government Spending

"Non essential" government spending is being cut. This is a topic we will now here more and more about, as the government starts to run short of sources of funding:

The Spanish government, which has launched a major fiscal stimulus plan, will cut other non-financial spending in other areas by 1.5 billion euros ($1.94 billion) this year in order to limit the budget deficit, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday. "This cut comes on top of the spending restraint in the budget," Zapatero told parliament. The government expects the budget deficit to reach about 6 percent of gross domestic product this year, from a surplus of about 2 percent of GDP in 2007.

Santander Cuts Loans Staff

Since there isn't going to be so much consumer lending in Spain in the future, it is pretty logical that the banks start cutting loans staff.

Spain's largest bank, Santander,is proposing cutting 300 jobs at its Spanish personal loan unit, about a third of the staff, a spokesman said on Monday, confirming a report in the daily Cinco Dias. The spokesman said he could not confirm whether management was due to meet with unions on Monday to discuss the cuts, as Cinco Dias reported.

The losses could be made through early retirement, voluntary redundancies or moving workers to other areas of the bank's business, Cinco Dias said. Santander Consumer Finance benefited from Spain's decade-long economic boom in which consumers gobbled up loans to buy cars and furniture and refurbish new homes. However, consumer financing is now a less lucrative business amid tighter international credit markets and the onset of Spain's sharp economic slowdown, which has created unemployment of about 14 percent.

Martinsa Lost A Lot More Money Than Initially Admitted

This could obviously be a sign of what may be going on elsewhere.

Spanish property company Martinsa Fadesa said on Monday it had made a 2.25 billion euro ($2.9 billion) loss in the nine months to September, not 230 million as it originally stated in November. Martinsa's revised profit and loss statement showed the firm had written off 2.37 billion euros. "In July a valuation of assets was not done, and the change in results happened after receiving the valuation," a spokesman for the company said. Martinsa was put into administration last summer in Spain's biggest ever insolvency case.

Telefonica "Booking" It's Loans For 2011

Telefonica's executives seem to share my opinion: 2011 may well be a hard year for credit (or even see a second credit crunch) as the Spanish government finds sources of refinancing for the debt it is now running up harder and harder to come by, and the corporate refinancing deals that have been made so far come up for refinancing. They are thus doing a kind of refinance "forward", paying a lot more interest now in order to reserve a loan for 2011 (so much for the idea that people think this will be a short-lived affair).

The 45 percent decline in syndicated loans in Europe is leading companies to pay higher fees to lock in bank loans years before their current agreements expire. Telefonica SA, Europe’s second-largest phone company, is offering a seven-fold increase in interest to banks now so it can access a 4 billion-euro revolving credit in 2011.

Telefonica, Europe’s second-largest phone company after Deutsche Telekom AG, is offering lenders interest of about 150 basis points more than the euro interbank offered rate to extend 4 billion euros of a 6 billion-euro revolving credit, two people with knowledge of the transaction said. That compares with a spread of about 20 basis points on the existing facility. A basis point is 0.01 percentage point.

Borrowers are arranging financing ahead of time on concern banks will hoard cash after $1.1 trillion of losses and writedowns froze credit markets last year. Syndicated loans to European companies declined to $927.3 billion last year from $1.7 trillion in 2007, according to data compiled by Bloomberg. Borrowing this year totals $6.4 billion.

In a forward start facility, a borrower proposes banks agree to provide a new credit line when its outstanding loan matures. They typically offer a one-time payment, higher fees and increased interest rates, or a combination. Banks that agree get paid the higher interest rate on both the current and new loan; those that don’t keep receiving the old rate.


Anonymous said...

There is been some confusion as to what can be inferred from the latest Tinsa index. Prices are not falling between 1.2 and 1.4 per month; the average price per square metre was 2084 in December and 2044 in January; that's a fall of 1.9 per cent. What I think Leirado meant was that the year-on-year fall was 8.8 per cent in december, and 10.1 in january (an increae of 1.3); if the year-on year fall kept increasing at that rate, it would top 20% by end of the 2009 (more specifically, it would range from 21.1 to 25.5%).
Link to all TINSA reports:


Edward Hugh said...

Hi Sylar,

Thanks for this. It is a really important point, since price decreases may be accelerating in this moment, rather in the same way the GDP contraction may also be doing so. I was too superficial (trying to be in too many places at once).


Edward Hugh said...


I just looked at the last report. The y-o-y chart is "beautiful" in that it says it all, the point is we have no idea where the interannual rate will bottom, but there is a clear trend right now.

Anonymous said...

I thought so. Everybody latched on to the 20% figure, and it seemed nobody really looked at the actual rate of increase now, which is truly awesome.
Glad you found it useful. Great blog, by the way. I come from, which is a great place, but rather noisy lately. Hope you don't mind if we quote you there often.