Sabtu, 07 April 2012

Spain in focus - Spain will need a bailout and frankly rather than lie about the need for same , they should go cap in hand now. That will keep the inevitable cost lower , which of course will not be the course taken by the spanish pols.....

Over 20% of All Real Estate Loans in Spain are Delinquent; Construction Firm Delinquencies Ended 2011 at 17.65%; Late Payment on All Loans Ended 2011 at 7.61%

Some rather shocking delinquency numbers (to mainstream media readers but not readers of Mish, Acting Man, Zero Hedge, Max Keiser, the Slog etc.) have surfaced in Spain.

Courtesy of Google Translate please consider The default property is multiplied by ten since 2008.

Upfront Notes:
  1. The following translation is somewhat choppy, and I present it as is. 
  2.  Recall that decimal points "." in Euroland are the equivalent of commas "," in the US. Thus "62.366 million" should read as 62,366 million or 62.366 billion euros. 
  3.  Many of the following just released numbers are as of the end of 2011. Rest assured numbers as of the end of the first quarter of 2012 are much worse.

With those notes out of the way, please consider the following translation.
Since the crisis began in 2008, the Spanish financial sector accounts have been seriously damaged by late payment of real estate companies, which rose from 1.98% in the first quarter of this year to 20.9% it closed 2011.

According to recent data published by the Bank of Spain of 298.267 million euros to the Spanish financial institutions were granted at the end of last year to real estate companies were delinquent 62.366 million, a figure that grew by 4.789 million in one quarter. In fact, between July and September 2011, the delinquent real estate companies stood at 18.97%, as there were 57.577 million euros a portfolio outstanding of 303,506,000.

As for the interannual evolution, real estate delinquencies rose seven basis points from 13.98% recorded in the last quarter of 2010 to 20.9% one year later, for a real estate loan portfolio totaled 315.782 million then , which fell in that period 17.605 million.

The Bank of Spain data also reflect strong growth in the delinquency of construction firms, and ended the year with 17.65% of outstanding claims, well above the 12.12% they had in December 2010. Compared to the previous quarter, the difference was just over one and a half points, as it stood at 16.09%.

The real estate and construction activity has gone from being the main driver of the Spanish economy its biggest drag in just four years, as has happened with the accounts of banks, which carry a much lower overall arrears of these depressed sectors .

In particular, late payment of credit extended by banks, savings banks, cooperatives and credit institutions closed 2011 at 7.61%, its highest level of the previous 17 years, particularly since November 1994 when it stood at 8%. This rise in defaults is a result of increased bad debts, which in December 2011 reached the EUR 135 838 000 134 227 000 compared to November, according to Bank of Spain.

Of that amount, the questionable real estate and construction touched the 80,000 million euros, standing at 79.759 million, which means that 58.7% of defaults across the Spanish financial sector came from this sector. But the situation was much worse a year ago, as the unpaid real estate accounted for 73% of total bank dubious, almost three quarters of the portfolio outstanding.

Meanwhile, the total credit portfolio of banks, savings banks, cooperatives and credit institutions fell to 1.782 billion euros in December, from 1.785 billion that were awarded in November.
Most mainstream media is woefully late in reporting this kind of news even though it is generally available with a bit less of a lag in Spain.

More importantly, some of us have predicted this catastrophe far in advance. Thus, what is shocking to many Johnny-come-lately analysts is simply a realization of what had to happen.A few of us insisted from the get-go that Greece, Spain, and Portugal would all blow sky high, and that process is clearly underway now. The party is not over yet because those countries, and perhaps even Italy are destined to leave the Eurozone (or extract equivalent punishment out of Germany, Austria, the Netherlands and France).

Mathematically this must happen, so it will. Delays and bailouts will increase the costs.


* CDS on debt from Santander, BBVA jump over past month
* Spanish sovereign CDS also rises on fiscal concerns
* ECB exit strategy seen a way off
LONDON, April 5 (Reuters) - The cost of insuring debt issued by Spanish banks against default has risen sharply over the past month, as a tough budget this week did little to soothe concerns over the country's deteriorating fiscal situation.
Default insurance for Santander is up 52 percent since March 1 to 393 basis points and the equivalent for BBVA jumped 54 percent over the same period.
Both Spanish banks underperformed the Markit iTraxx senior financials index - which measures Europe's financial institutions' insurance, or credit default swap prices. It rose by 20 percent over the same period.
Markit analyst Gavan Nolan said s lot of the moved was caused by the European Central Bank's low-interest, three-year loan programmes, or LTROs, that have pumped money into the banking system.
"They've actually tightened the relationship between the banks and the sovereign. So the banks have been buying sovereign debt and that has made their fortunes even more intertwined than they have previously," he said.
Pressure on Spanish government debt has had a knock-on effect on banks.
Yields on 10-year Spanish bonds this week rose to their highest since December 2011 at 5.8 percent after the Spanish Treasury had to pay more dearly to borrow in an auction.
The cost of insuring Spanish sovereign debt against default meanwhile has jumped 111 basis points to 467 bps over the past month, according to Markit data. This means it costs $467,000 annually to buy $10 million of protection against a Spanish default using a five-year CDS contract.
Spain' tough budget this week has not been enough to calm investor nerves and many fear too much austerity could choke an already struggling economy where unemployment rose to a staggering 22.9 percent in the fourth quarter of 2011 - the highest in the European Union.
After keeping interest rates steady at 1.0 percent on Wednesday, European Central Bank President Mario Draghi said it was premature for the bank to start planning a retreat from emergency crisis-fighting and that the ECB would need time to see the full impact of bumper funding operations it has used to help banks.
Several policymakers, led by the German Bundesbank chief Jens Weidmann, had said in recent weeks the ECB needs to prepare an exit strategy after the massive cash injection - comments that led to a steepening of the money market curve as markets priced in higher rates in 2013 and 2014.
But Alessandro Giansanti, senior rate strategist at ING, said markets had scaled back chances of higher rates in 2014 after the meeting, with 3-month Euribor rates coming further under pressure to hit their lowest since June 2010.
The bank-to-bank rate, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, fell to 0.766 percent from 0.768 percent in the previous session.
Giansanti said the ECB would have to see the inter-bank market functioning again to unwind the measures it took to shore up the banking system.
"The peripheral banks are still not able to get money in the interbank market so they are relying too much on the ECB," he said.
But with domestic banks in struggling peripheral countries increasingly leveraged with their own risky debt, such normalization may still be a way off.
"I think the pressure is going to continue on Spain and there's going to be more pressure for the ECB to provide further liquidity," Nolan added. "I don't think we are at the stage of an exit strategy yet."

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