If we accept that the evolution of debt is a relevant factor in the explanation of the economic cycle, with the usual affirmation that the increase in debt explains the evolution in GDP, with a certain lag, then the credit cycle in Spain has been particularly intense.
UBS | The recent credit market sell-off, spate of defaults, spike in Chinese yields and spreads, bond issuance cancellations basically reflect: 1) investors re-pricing credit risk and policy easing expectations.
In the early years of the crisis, Spain’s capital markets and banks suffered severe financing restrictions, but since then access to funding has been slowly re-established for big companies, as well as for SMEs and families. And analysts believe this is now functioning normally.
MADRID| Sean Duffy| Spain has been trying to enhance the business climate for entrepreneurs, but experts say that more needs to be done to spur growth in vital sector of the economy.
MADRID | The Corner | The Spanish Confederation of Small- and Medium-Sized Companies (CEPYME) points to a “nascent trend” towards a normalization of credit markets, which will permeate down to the real economy over the course of next year.
MADRID | By Luis Arroyo | As the ECB’s stress tests showed, Spanish banks have enough capital to face a serious economic crisis, with a GDP contraction of 5%. However, this does not mean that Spanish lenders are going to start lending credit right now. Up to present nobody has been preventing them from doing so, and yet credit is not flowing.
MADRID | The Corner | The ECB published yesterday figures on bank lending that show the outlook keep being worrying. On the one hand there was an improvement in credit to households and on the other hand a further squeeze on credit to business, especially a pronounced decline in countries like Spain. The overall balance in July is a contraction of 1.6% YoY, which represents a further improvement since it got to the bottom during November, December and January (-2.5% YoY each month). Credit in the private sector continues to contract (-2.3% YoY) in line with last month but improving over July 2013 (-3.7% YoY ) and in general over the monthly evolution in 2014. In Spain the credit contracts € 7bn (-1.2% MoM from -1.04% MoM in June) and it moves back by € 77 bn YoY (-11.7%). In Italy the set-back is even bigger MoM (-3.6%) but is limited to +1.6% YoY.
MADRID | The Corner | The Eurozone Sentix Index fell 2.7 points in August, its lowest level in a year, from 10.1 reached in July. The analysts’ consensus had expected that the indicator would go back to 9 points. Sentix attributes in a press release this decline to the approved economic sanctions against Russia and points out that “As this slump derives from an event which is subject to politics and power play, the central banks, particularly the European Central Bank, will have difficulty in trying to counter this.”
MADRID | The Corner | The ECB reported on Thursday the data of interest rates applied in banking corporate loans in June, which have been reduced by 18 bp in loans worth up to €1M for the EZ (up to 3.57%). Moreover, these discounts have been widespread and even higher in peripheral economies’ banks: -21 bp up to 4.3% (weighting by GDP of rates applied in Spain, Italy, Ireland and Portugal).