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Martinsa Fadesa says it is insolvent

July 14th, 2008

MADRID (Thomson Financial) - Leading Spanish property group Martinsa-Fadesa said on Tuesday that it was declaring itself insolvent, having failed to raise a loan as part of a refinancing package.

The company said that a board meeting late on Monday had decided to make a request to be declared in breach of payments.

This would prevent its crisis from becoming ‘irreversible and having grave repercussions on creditors and the interests of all shareholders.’

Martinsa-Fadesa, which is quoted on the Madrid stock market, is a leading property group in Spain.

The group said that despite many attempts, it had been unable to obtain a loan of 150 million euros needed as the basis for refinancing.

On Friday, the group had requested an extra delay to raise the loan as part of a plan to refinance debt of 4.0 billion euros.

Martinsa-Fadesa has assets which were estimated to be worth 10.8 billion euros, and it employs 880 people.

Source : Thomson Financial

Spanish property group Martinsa-Fadesa says it is insolvent - Forbes.com

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Spain’s biggest developer collapses

July 14th, 2008

Fears about the extent of the economic problems facing Spain intensified yesterday when the country’s largest property developer filed for bankruptcy.

Martinsa-Fadesa, whose interests span apartment buildings, hotels and golf courses, said that it had been unable to secure a €150 million (£119 million) loan from the banks and creditors that hold its €5 billion of debt.

But remember the back-drop - a financial crisis caused by tightening, almost halt in lending:

More than 700,000 houses were built in Spain in 2006, more than Britain, Germany and France combined, but the market ground to a halt last year amid rising interest rates and tighter lending conditions from banks worried about the sub-prime crisis in the United States. House prices in the country are falling at the fastest rate for a decade.

Spain’s largest property developer collapses - Times Online

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We won’t let Freddie, Fannie fail : US Gov’t

July 13th, 2008

Freddie Mac, Fannie Mae are safe, so are bank deposits (up to US$100,000, the federal deposit insurance limit.)

In announcing the the two companies are somewhat akin to offspring of the government, the government also said they could not let these two fail as between them they hold or guarantee approximately 50% of all US (residential) mortgages.

Their collapse would likely lead to many more collapses at best and systemic failure, total collapse of the financial markets at worst.

Not to be underestimated.

Of course over the weekend, we also saw another US Bank fail : IndyMac which reopened under US Fed management.

News commentators of course ask, who pays the bill, answering themselves ‘US taxpayers.’

I think, however, they forget, that the result will be more money printing and therefore affect anyone holding US-dollar instruments - causing losses due to devaluing of the currency.

Of course anything denominated in US Dollars should go up as the effect of inflation hits. In real terms this may be preserving wealth, not making a profit, but I’d rather that than lose.

That’s why people are buying gold and silver.

And property could be another attractive investment to preserve wealth, potentially generate cash-flow or at least as a place you can live in.

Afterall, you can’t live in share certificates, or gold (unless you build a house out of it I suppose.)

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