Spain’s Biggest Bankruptcy Ever Hits Banks, Mexico, Brazil, Descends into Bitter Farce…”The big surprise was that negative profits were converted into positives.”
by Don Quijones
WolfStreet.com
December 15, 2015
Abengoa, the Spanish renewables giant that once thought it had mastered the dark arts of financialization only to crumble under the weight of its own debt, urgently needs a lifeline. In November, it filed for preliminary protection from creditors. If it doesn’t get a lifeline, it will be go down in history as Spain’s biggest bankruptcy ever.
According to the latest accounts, its creditors may have thrown it that lifeline, but barely enough to last through the very inconvenient general elections this Sunday and the holidays, when the government is off.
A Last Minute Stay
Amazing as it seems for a publicly traded company, there’s still “no official figure for the firm’s total financial liabilities,” Reuters reported, though “separate sources familiar with the matter say they total at least €25 billion.”
The banks on the hook for about 80% of that debt include Spain’s Santander, Caixabank, Bankia, Banco Sabadell and Banco Popular; France’s Credit Agricole, Société Generale and Natixis; London-based HSBC and the US behemoths Bank of America and Citi. These banks could have a big problem on their hands, especially since the Spanish government is currently powerless to intervene.
In normal circumstances, finding a few hundred million euros to help out a domestic company in need — especially one that is estimated to owe national and international banks and investors €25 billion — would be routine, particularly when Mario Draghi is conjuring up €60 billion of QE funny money each month.
But these are not normal circumstances. The general elections this Sunday are so tight they’re impossible to call. And just before the election is certainly not the time for the government, which has been preaching austerity to the regular people, to be bailing out yet another big company.
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