http://www.guardian.co.uk/world/2013/feb/19/spain-property-crash-reyal-urbis
( First of many shoes to fall in the Spanish RE sector ? )
http://www.zerohedge.com/news/2013-02-19/spains-second-largest-bankruptcy-roils-real-estate-market-leaves-tepper-potentially-
Submitted by Tyler Durden on 02/19/2013 16:56 -0500
Chamber of Deputies Analysis
Grillo's public meetings are getting "oceanic", he is attracting many people disappointed with this political class with a very
Assuming the Center-Left hangs on to win the Chamber, the outcome in the Senate is crucial as to whether or not there is a
extremely disappointed with the policies of Berlusconi and Monti.
They want to stay on the euro, deeply cut public spending, and deeply cut taxes as well. They also want to reduce public
debt via sales of public assets, cut highest pensions, and reform the job market.
Their proposals are the most libertarian ever seen in Italy and extremely aggressive by Italian standards.
The party has very little support from media and no "brand awareness" yet they seem to be in a fast upward trend in social
media. Some FiD messages and campaigns are going viral, perhaps a sign that something is brewing.
FiD may be able to overcome the access threshold for Chamber at national level and for Senate as well in some key
regions. That would be an amazing result. It would probably be the first time that in a "Club Med" country the crisis makes
stronger a libertarian party instead of far right or far left.
Another key point is that a significant turnout for FiD could be at the expense of Berlusconi or Monti, especially in the 2 key
regions, Lombardy and Veneto. Should that happen, it could help the center-left get the relative majority it needs to avoid a
hung Parliament.
Best regards,
I received the above email a couple days ago. This morning "AC" penned me regarding turmoil in the Fermare il Declino camp that is likely to sink the party. She writes ...
Yet, if AC's previous analysis is correct, it will strengthen the odds of a hung parliament as disgruntled voters may sit out or choose between Movimento 5 Stelle or Berlusconi's Center-Right party.
Mike "Mish" Shedlock
http://www.zerohedge.com/news/2013-02-19/italian-bank-loans-plunge-record-leaders-say-no-cause-alarm
Submitted by Tyler Durden on 02/19/2013 11:33 -0500
( First of many shoes to fall in the Spanish RE sector ? )
Spanish property slump pushes Reyal Urbis over the edge
Real estate firm files for insolvency after failing to renegotiate €3.6bn (£3.1bn) of debt with creditors
Email
Reyal Urbis, Spanish real estate firm, has filed for insolvency. Photograph: Marcelo Del Pozo/REUTERS
Spain suffered its second biggest corporate crash on Tuesday when real estate giant Reyal Urbis filed for insolvency as banks lost patience with a debt-strapped company that never recovered from the country's burst housing bubble.
Reyal Urbis filed for insolvency after failing to renegotiate €3.6bn (£3.1bn) of debt with creditors that are increasingly impatient with the numerous real estate companies that have fallen foul of the property implosion.
With house prices still falling four years after the bubble burst and the overhang of unsold new properties estimated at up to 1Mm houses and apartments, the future looked bleak not just for Reyal Urbis but other developers weighed down with debt.
Reyal Urbis valued its property portfolio at €4.2bn in June 2012, but its sliding value means debt is now thought to be larger than assets.
A court must now decide whether to liquidate the company – a process that make take several years.
Real estate developer Martinsa Fadesa became Spain's biggest insolvency in 2008 when it defaulted on €7bn of debt. It continues to operate, but at a loss.
Spain's Sareb bad bank, set up to take toxic assets from banks rescued under a €40bn EU deal last year, is Reyal Urbis's biggest creditor.
Bank creditors told Reuters that other real estate companies could soon follow Reyal Urbis.
"Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation," one source at a creditor bank said. "Why would you extend a new loan today?"
http://www.zerohedge.com/news/2013-02-19/spains-second-largest-bankruptcy-roils-real-estate-market-leaves-tepper-potentially-
Spain's Second Largest Bankruptcy Roils Real-Estate Market, Leaves Tepper Potentially Scuppered?
- Bad Bank
- Barclays
- BWIC
- CRAP
- Creditors
- Housing Market
- Market Crash
- Nationalization
- Real estate
- Recession
- recovery
- Reuters
- Royal Bank of Scotland
It's no shock that the Spanish housing market is horrible but hope has been, following the government's nationalization of various banks and creation of the 'bad bank' to soak up all the toxic crap those banks had on their books, that a recovery could blossom. It appears not - not at all. Not only are bad loans rising at record rates with house prices remaining down over 40% but now Reyal Urbis has filed for insolvency making it the nation's second largest bankruptcy as dozens of smaller firms have failed.
What makes this so important is the fact that the banks were unwilling to refinance the debt - seemingly comfortable with liquidation - summed up perfectly: "Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation. Why would you extend a new loan today?"
Reuters reports further that the hard line taken with Reyal Urbis could be a taste of things to come as the firm leaves EUR3.6bn of debt and a property portfolio valued at a magical EUR 4.2bn - which we suggests the banks do not agree, and while the nation's bad bank is a major creditor, so it appears, isTepper's Appaloosa holding a majestic EUR450mm in debt.
Spanish real estate firm Reyal Urbis has filed for insolvency, the second biggest casualty of the country's property market crash and a sign banks and the government may turn their backs on more indebted companies.Dozens of property firm have already collapsed in Spain, where house prices have fallen around 40 percent from their 2007 peak. But until recently Spanish banks have refinanced billions of euros of debt in the hope of an economic upturn.Liquidations are now more likely, bankers say, as prices continue to slide in a protracted recession and lenders, after a government-led clean-up, have set aside money to cover losses....Sources at three bank creditors told Reuters the hard line taken with Reyal Urbis could be a taste of things to come...."Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation. Why would you extend a new loan today?"
As well as Sareb, which is owed 785 million euros, the company's creditors include Spain's biggest banks - Santander , owed 550 million euros; BBVA, owed 120 million; and Banco Popular owed 220 million.Barclays sold 450 million euros of its debt to U.S. hedge fund Appaloosa, while Royal Bank of Scotland is owed 300 million eurosReyal Urbis, which valued its property portfolio at 4.2 billion euros in June 2012, said it would continue to operate as permitted by Spanish insolvency laws. Its insolvency petition now goes to court and its fate will be in the hands of a judge, who will decide whether to appoint independent administrators...."Sareb holds some of the debt but has said it is not in the business of refinancing so it will be interesting to see what they do. On top of that, any liquidation wouldn't impact lenders as harshly as it would have two or three years ago," the source said, referring to the funds set aside by banks to cover losses.
At the end of 2011, Reyal Urbis owned some 888 finished homes in a country where over 3 million homes lie empty. The company also had 8 million square metres of land for development and 237,000 square metres of commercial property, including offices, shopping centres, industrial property and hotels."The high amount of land and low level of income producing property in the portfolio is clearly contributing to the pressure Reyal Urbis is under," said Roger Cooke, managing director at property consultant Cushman & Wakefield in Spain.Land and work in progress accounted for about 65 percent of its portfolio at the end of 2011, according to the company's last annual report.
and........
http://globaleconomicanalysis.blogspot.com/2013/02/european-reader-offers-insights-on.html
Tuesday, February 19, 2013 11:49 AM
European Reader Offers Insights on Upcoming Italian Election
Reader "AC" who is from Italy but now lives in France has some very interesting thoughts on the upcoming elections in Italy. "AC" writes ...
Hi Mish,
Italian elections will take place this weekend.
A hung Parliament is likely. This is due to the highly fractionated political landscape in conjunction with electoral law that favors such an outcome.
In the Chamber of Deputies (the lower house of Italy's parliament) voting rules give extra seats to the largest party by popular vote. Senate seats (the upper house) are allocated on a regional basis.
Chamber of Deputies Analysis
- The Center-Left coalition (Bersani) is losing steam but will likely end up with the highest percentage of votes.
- The Center-Right (Berlusconi) is recovering strongly and cannot be entirely discounted.
- Monti's center coalition will likely score poorly, between at 10 and 13%.
- Rivoluzione Civile (far left) will likely score between 4 and 6%, and may be unable to reach the Chamber access threshold (4%).
- Beppe Grillo's Movimento 5 Stelle (Five Star Movement) is again on the rise. Movimento 5 Stelle may even reach 20% and become the second largest party in the country.
- The first wild card is a high and rising number of undecided voters.
- A second wildcard factor is the recent rise of "Fare per Fermare il Declino" (literally "Act to Stop the Decline", acronym FiD), a primarily Libertarian party founded less than a year ago.
Grillo's public meetings are getting "oceanic", he is attracting many people disappointed with this political class with a very
populist program.
In the campaign you can hear some extremely populist proposals, most of them from Grillo, Berlusconi, and Rivoluzione
In the campaign you can hear some extremely populist proposals, most of them from Grillo, Berlusconi, and Rivoluzione
Civile.
Populist Proposals
- Give back Real Estate tax collected in 2012 (Berlusconi)
- Forbid foreclosure of the main house of a person or a family in case of delinquency (Grillo and Berlusconi). Imagine the effect on mortgage issuance!
- Give a minimum guaranteed survival wage from the government to all those are unemployed (Grillo, Rivoluzione Civile).
- Even Monti is promising to cut taxes, the same taxes he decreed (and that center-left and center right approved as well).
Assuming the Center-Left hangs on to win the Chamber, the outcome in the Senate is crucial as to whether or not there is a
hung Parliament. The regions are, Lombardy, Veneto, Lazio, Sicily, Campania. By far the most important is Lombardy, with
the highest number of senators.
In regards to the Senate outcome, it's important to look at a very recent rise of FiD, "Fare per Fermare il Declino".
FiD was founded by a liberal/libertarian economic journalist (Oscar Giannino) and free-market oriented economists, some of
In regards to the Senate outcome, it's important to look at a very recent rise of FiD, "Fare per Fermare il Declino".
FiD was founded by a liberal/libertarian economic journalist (Oscar Giannino) and free-market oriented economists, some of
them teaching in the US.
FiD has a program of 10 main points. They have a "pro-market" agenda, not a "pro-business" agenda. The party is
FiD has a program of 10 main points. They have a "pro-market" agenda, not a "pro-business" agenda. The party is
They want to stay on the euro, deeply cut public spending, and deeply cut taxes as well. They also want to reduce public
debt via sales of public assets, cut highest pensions, and reform the job market.
Their proposals are the most libertarian ever seen in Italy and extremely aggressive by Italian standards.
The party has very little support from media and no "brand awareness" yet they seem to be in a fast upward trend in social
media. Some FiD messages and campaigns are going viral, perhaps a sign that something is brewing.
FiD may be able to overcome the access threshold for Chamber at national level and for Senate as well in some key
regions. That would be an amazing result. It would probably be the first time that in a "Club Med" country the crisis makes
stronger a libertarian party instead of far right or far left.
Another key point is that a significant turnout for FiD could be at the expense of Berlusconi or Monti, especially in the 2 key
regions, Lombardy and Veneto. Should that happen, it could help the center-left get the relative majority it needs to avoid a
hung Parliament.
Best regards,
ACAddendum: Turmoil in FiD
I received the above email a couple days ago. This morning "AC" penned me regarding turmoil in the Fermare il Declino camp that is likely to sink the party. She writes ...
Hi MishIt's safe to add this revision to the number of election wildcards in Italy.
The news today is FiD is in trouble because Zingales (one of the party founders) left after discovering that the party President (Giannino) discussed having a degree from the US that he does not really have. Giannino is considering stepping down to not undermine the credibility of the party. This will likely have a strong effect on the share they get and therefore on their indirect effect on the elections.
The story is rather strange. Apparently the degree was mentioned on a website, not even posted by Giannino, yet this seems enough to sink FiD. Sadly many politicians in Italy intentionally lie and on much more serious things, but this seems OK with the voters.
Best regards,
AC
Yet, if AC's previous analysis is correct, it will strengthen the odds of a hung parliament as disgruntled voters may sit out or choose between Movimento 5 Stelle or Berlusconi's Center-Right party.
Mike "Mish" Shedlock
http://www.zerohedge.com/news/2013-02-19/italian-bank-loans-plunge-record-leaders-say-no-cause-alarm
Italian Bank Loans Plunge By Record; Lenders Say "No Cause For Alarm"
While Italian bank and sovereign bond markets have showed a little weakness in recent weeks, they remain largely in limbo - supported on one side by an inexorable promise by ECB's Draghi outweighing the crushing reality of economic fundamentals. The transmission mechanism, claimed to 'fixed' by Draghi, is simply not. In fact, as the ABI notes, loans to families and companies dropped by record amounts in January. AsANSA reports, the continuing recession is not only weighing on loan demand but banks are unwilling to lend their ECB-funded reserves as delinquent loans continue to surge year after year (at record highs up over 16% YoY). Deposits rose - theoretically a positive - and yet as we have noted this is a preference for liquidity not a signal of confidence in Italian banks. However, all this terrible news, weakening economic climate, and plunging credit creation is described by the Banking Association as "no cause for alarm." Phew...
Italian bad loans soaring...
Via ANSA.It,
Loans to families and companies dropped by record amounts in January, Italy's banking association ABI reported Tuesday, adding that it expected the country's economy to contract even more than it previously forecast.According to ABI the value of total loans issued, 1.467 billion euros, represented a 2.5% drop on the December value and was largely the result of the continuing recession in Italy.
Meanwhile, for the current year ABI researchers said their forecasts of a 0.6% contraction in the economy would likely be revised for the worse after a higher than expected contraction of 0.9% in the fourth quarter of 2012. On this basis, and unless the government takes any measures to stimulate growth, the economy could be on track to shrink by about 1%, ABI said.The banking association also warned of the increasing amount of potentially dud loans in the financial system - another result of the continuing poor economic climate in Italy - but added there was no cause for alarm, as the increase was "physiological" and "could be managed".According to ABI, the total value of bad loans reached a net value of some 64.3 billion euros at end 2012, representing about 3.3% of total bank lending, up from about 2.7% to the end of 2011.
Meanwhile, ABI said that bank deposits continued to increase in January, up 6.8% on December, reaching some 1.2 trillion euros.The January growth rate marked an acceleration with respect to December's +6.2% reading.ABI said the increase in bank deposits is likely a result of consumers' preference for liquidity in the current recessionary climate.
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