Allianz GI: Spain will need a €200bn refinancing in 2013/2014

During the last quarter of 2012, Spain will have a refinancing requirement of €40bn, most of which is due in October, when government bonds and treasury bills worth around €30bn will be due, warned Allianz Global Investors.

But Spain’s need for external finance could increase over the next years.

In a report on Spain’s financial situation, the firm said the total amount for 2012 could yet increase due to the upward revision of the budget deficit.

“For 2013 and 2014, the country will have total refinancing requirements of slightly
more than €200bn. It was mainly domestic financial institutions themselves who were buyers of those bonds. Since the end of 2011, they increased their share from around €180bn to almost €250bn by August 2012,” Allianz said.

Spanish refinancing needs could be driven up further if autonomous regions such as Murcia, Catalonia and Valencia are forced to turn to financial support from the state.

“For the first quarter of 2012, the debt of the autonomous regions amounted to approximately €145bn, equivalent to 13.5% of the Spanish gross domestic product. The most indebted regions are Catalonia (about 21% of regional GDP), followed by Valencia (about 20%) and the Balearic Islands and Castile with almost 17%,” Allianz said.

Without the consent of the central government, the regions can no longer issue their own bonds or take out loans abroad. And regular presentations on savings plans are now on the agenda, because the Spanish regions control up to 40% of public spending in Spain.

A clearer picture of Spain’s financial needs will come from the publication of the results of new stress tests in November.

When Spain submitted an official request for financial assistance on June 25, the
Spanish banking sector had financing needs of between €51 and €62bn.

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