LONDON | The slight, although gladly acknowledged, fall in unemployment in the UK caused an improvement of the economic background rate from 63.4 to 65.3. It has been the only positive news released Monday by Alliance Trust, whose UK financial reality index noted a deterioration in households' financial situation during the second quarter of this year. In any case, the number being below 100 signals trouble, and it has been…
Being a member of the euro club continues offering confusing evidence of providing protection against the global economic downturn. In the construction sector, seasonally adjusted production rose by 0.1% in the euro area while it grew 1.6% in the European Union in May 2012, compared with the previous month. But in April 2012, production had decreased by 3.7% in the common currency region and 6.9% outside it. Compared with May 2011, production in…
The heaviest economies of the euro zone’s periphery, Italy and Spain, have behaved in a more competitive manner than most sceptics about the laggards of the common currency union would have it. Companies from both Mediterranean countries have increased their presence in markets outside their natural environment, partly forced by a falling domestic demand but due to the strength of production structures and new-found adaptability, too. Here on The Corner,…
By CaixaBank research team, in Barcelona | The worsening climate in peripheral Europe has affected the corporate bond markets. Whereas, during the previous months, this market stood out for its remarkable ability to resist the adversities of the euro area crisis (from the point of view of issuances and the extent of capital flows), in May investor mood and the issuance of corporate bonds had been fully infected. In addition,…
While waiting for the changes the European rescue fund needs to introduce in order to recapitalise the banking sector directly, especially the Spanish one, JP Morgan’s global equity department has made an interesting answer-question list with the main doubts that everybody could have concerning this instrument. The starting point could be the role of the European Financial Stability Facility /European Stability Mechanism until the last European Summit. Up to that…
Spanish companies aren’t alone in extending their links to the Latin American markets in a bet to withdraw from the volatile European economies. France’s group Accor this week announced its plan to set itself as a sector leader in the area with the acquisition of the South American hotel portfolio of Grupo Posadas. The transaction, which adds to the external growth strategy of the company, includes 2,600 rooms and a secured…
MADRID | Everyone seems to skip the nagging fact that stress tests undertaken by Oliver Wyman and Roland Berger only focused on credit risk. Thus, the extra capital requirements only reflect shortcomings in the banking book due to potential bad loans. But any serious test has to embody securities risk in general and sovereign bonds in particular. The European Banking Association has performed it every time it has put European…
MADRID | ACS reported that Société Général has agreed to refinance part of the debt of its 8.25 percent acquisition of Iberdrola. The transaction, signed by ACS’ subsidiary Residencial Montecarmelo, allows to substitute the loan currently held with a syndicate of banks, in which BBVA acted as agent. The operation accounts for €1.6 billion and will leave ACS with a 6.6 percent stake in Iberdrola, that is, ACS will still…
LONDON/MADRID | Finance-wise, Italy is unnerving some of its neighbours in the periphery of the euro zone. Particularly in Spain, government officials wonder aloud about the unfairness of the whole situation: while yields of the Spanish 10-year sovereign bonds time and again cross the 7 percent frightening barrier, Italy managed last week to sell €5.25 billion in debt of various maturities at much lower interest rates in most of the…
By valenciaplaza.com | IG Markets' Daniel Pingarrón said in a conversation with VP for The Corner that the European authorities and the Spanish government should improve their timing if they want investors to believe that they can set up a coordinated, effective plan. The Spanish market index Ibex spiked after president Mariano Rajoy announced its austerity policy, but it was a short-lived reaction. Why was that? The recovery of the…