Eirini Tsekeridou (Julius Baer) | Oil prices have declined massively over the last weeks, as Russia and Saudi Arabia could not reach an agreement regarding output cuts. Saudi Arabia is trying to punish Russia, while Russia is seeking to hurt US oil producers due to US sanctioning of Russian companies. US shale producers, especially the highly leveraged ones, will face default as their breakeven price is about USD 50 per barrel.
Half of the line of guarantees’ first tranche, amounting to 20 billion euros, will be earmarked for SMEs and the self-employed, guaranteeing 80% of new loans and financing renewals. The remainder will go to medium and large companies. In the latter’s case, up to 70% of new loans will be guaranteed, while loans’ renewals will be guaranteed up to 60%. Once the resources are used up, the government will automatically activate new tranches of credit lines up to the maximum target of 100 billion euros.
After announcing that the United States considered it “basic infrastructure” in the coronavirus health emergency, Grifols has signed a multilateral collaboration agreement in that country with the U.S. Advanced Biomedical Research and Development Authority (BARDA), the U.S. Food and Drug Administration (FDA) and other federal public health agencies. The objective will be to collect plasma from patients who have recovered from Covid-19, process it and produce hyperimmune immunoglobulins.
The coronavirus crisis could cost Spain 3.9% of GDP, in a mild scenario. But if the current containment and crisis measures are extended for three months, GDP could fall by up to 6 percentage points. And if they continue until summer, by almost 10. This is one of the conclusions of the report presented yesterday by Nuno Fernandes, Professor of Finance at IESE Business School.
Spain’s top companies are preparing a joint effort to buy the necessary material for this health crisis, such as respirators or facemasks. Their intention is to coordinate, as best as possible, the donation of essential material, and not duplicate efforts. This important operation is estimated at around 150 million euros, at the rate of over 25 million per firm, according to internal sources who have confirmed it with news agency Colpisa. That said, each company decides on the amount it wants to contribute.
The Covid-19 outbreak leds to the steepest decline in business activity ever recorded in the Eurozone: it plummeted to 31.4 in March against 51.6 in February, a record low since July 1998. Even though manufacturing PMIs fell less than expected, they could have been inflated, once again, by longer supplier delivery times due to supply chain disruptions and thus send an overly optimistic signal, Susan Soho, economist at Julis Baer, explains. Moreover, they are likely to fall further in the coming month, as lockdown measures intensify.
Over the last two decades, the Spanish health sector’s percentage of the country’s total employment has grown considerably. In 2000, the number of people working in the health sector barely represented 4% of all those employed in Spain. In 2019, however, this proportion was close to 5.7%. This data is from the Active Population Survey (EPA), which is picked up in a Funcas document. It reminds us that, despite the fact Spain’s health situation is critical at the moment, the country has never had as many people working in the sector as it does today.
US President Donald Trump has reportedly declared Grifols’ donation centers and fractionation plants to be essential infrastructures. So their activity would be guaranteed in the face of a possible economic slowdown. The US is the country where Grifols has most of its fractionation plants and plasma donation centers (more than 92% of the 300 centers it operates).
The Vice-President of the European Central Bank (ECB) and former Spanish Economy Minister Luis de Guindos has recently defended the implementation of a “minimum emergency income” during the coronavirus crisis. “Let us all take care of the basic needs of the most vulnerable population,” he said. On the other side of the Atlantic, the US Senate is planning to send cheques for $1,200 (1,125 euros) to citizens with an annual gross income of $75,000 (70,000 euros) or less.
Boris Johnson’s government would be looking for ways to take a stake in UK airlines such as Virgin, Easyjet or British Airways.The British government wouild intend to inject millions of pounds in exchange for shares in the companies, reported FT. These would later be sold to private investors. The main problem is that British Airways is part of the IAG group, based in Spain.