Spain Braces for its Biggest Corporate Insolvency… Ever!

Friday, November 27, 2015
By Paul Martin

Blood on the Bourse

by Don Quijones
November 26, 2015

Spain is about to experience its biggest corporate insolvency ever. Unlike Bankia and all of Spain’s other bankrupt savings banks, Abengoa, a Seville-based multinational specialized in renewable energy and “environmental services,” is unlikely to receive a taxpayer-funded bailout – at least not just yet, not with general elections looming in less than a month’s time.

Following yesterday’s announcement that the company was seeking preliminary protection from creditors, Abengoa’s bonds and shares went into freefall. It was a financial bloodbath. According to S&P Capital IQ LCD, its euro-denominated 8.5% notes due 2016 plunged 38.5 points to 25.5 cents on the euro, after having been up at 93 cents on the euro only two weeks ago.

The U.S. dollar-denominated paper also suffered huge price declines in block trades. The engineering “Finance” unit’s 8.875% notes due 2017 plummeted 42.5 points, to 16.5 cents on the dollar, while the pari passu 7.75% notes due 2020 plunged from 45 before the announcement to 15 cents on the dollar.

On Spain’s benchmark stock index, the IBEX 35, Abengoa’s B shares – valued just over a year ago at €4 – plunged as much as 69% to €0.28 before staging a brief dead-cat bounce. At the time of writing today, the B shares have fallen a further 25%.

With total debt of nearly $9 billion and growing, Abengoa yesterday filed under article 5 bis of the Spanish insolvency law. As WOLF STREET reported a few months ago, the company was undone by its mad rush for growth at any cost as well as its unconstrained embrace of the dark arts of financialization.

The Rest…HERE

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