Gas Natural Rating Watch Placed On Negative By Fitch

Fitch Ratings has today placed Gas Natural SDG's (Gas Natural) Long-term Issuer Default rating of 'A' and Short-term IDR of 'F1' on Rating Watch Negative (RWN). Gas Natural Finance BV's senior unsecured rating (issues under its EMTN programme are guaranteed by Gas Natural) of 'A+' and the 'F1' rating for its Euro commercial paper programme are also placed on RWN.

The background to this is that Spanish utility Gas Natural have announced they are borrowing 17 billion euros in a syndicated loan provided by ten banks that were mandated yesterday to finance the acquisition of rival Union Fenosa. Barclays, BNP Paribas, Caja Madrid, Citigroup, ING, La Caixa, Royal Bank of Scotland, Santander, Societe Generale and UBS are to lead the loan backing the purchase.

Spanish utility Gas Natural agreed to buy a 45 percent stake in rival Union Fenosa from the debt-ridden builder ACS in a deal worth.

This sale enables ACS (Actividades de Construccion y Servicios SA) to cut debt after booking a net financial gain of 2.73 billion euros ($4.26 billion) from the sale of its stake in Union Fenosa SA. In other words my impression is that simply no one here now has any spare money. Gas Natural helps out ex-Real Madrid president Florentino Perez and his property company, and for their kindness they themselves are put on RWN by Fitch.

The background to all this is that, as can be seen from the chart below, the indebtedness (or leverage) of Spanish corporates (including non-construction corporates) is even greater than the indebtedness of Spanish households, and is way above the average for the other eurozone countries.




Bankruptcies Rocket


Also, according to INE data out today, corporate bankruptcies were up in Q2 by 172% when compared with Q2 2007. Some 206 firms and individuals suspended debt payments during the second quarter amid a severe economicslowdown. The total number of Spanish debt payment suspensions jumped to 631 from 232 a year earlier, with nearly half of corporate defaults among construction and property businesses that have run out of customers as house sales dive amid credit restrictions and falling prices, in real terms.

The previous record was 425, set in the first quarter of this year, for the series which began in 2004. On and on we go then, until, of course, the day comes when we don't.