Spain

Russian billionaire Mikhail Fridman’s holding company, LetterOne, has stepped up its criticism of a turnround plan at Spanish grocer Dia Group as it filed regulatory documents for its own bid to buy out and fix the troubled chain, the Financial Times reported. “A lot of Dia’s problems have been in the making for some time,” said Stephan DuCharme, managing partner of LetterOne division L1 Retail.

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Banco Santander SA reminded investors that juicy bonds can come with nasty surprises. The Spanish lender rattled the bank Additional Tier 1 market by saying it will skip an option to call 1.5 billion euros ($1.7 billion) of perpetual contingent-convertible notes next month, sending the bonds tumbling, Bloomberg News reoprted. The announcement came late Tuesday, right at the deadline for a decision, after the bank kept investors in the dark for weeks regarding the call option and in the aftermath of another deal, a sale of dollar AT1 notes on Wednesday.

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Russian billionaire Mikhail Fridman has offered to buy Dia Group in a deal that gives the struggling Spanish supermarket chain an equity value of €417m, a deep discount from its €2.7bn valuation at the end of 2017, the Financial Times reported. Mr Fridman’s holding company, LetterOne, which owns 29 per cent of Dia through its L1 Retail fund, has offered to purchase the rest of the company for €0.67 a share, a premium of 56 per cent to Monday’s closing price. LetterOne bought much of its existing stake early last year, when shares were trading at about €4.

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Should a country embrace buyout groups with a growing appetite for its assets or repel them as rapacious capitalism on fears of job cuts and short financial gains? That’s the question facing Spain — which for the greater part of the past decade has suffered a steep economic crisis — as it finds itself luring a growing number of buyout funds looking to snap up assets, according to DD’s Javier Espinoza, the Financial Times reported.

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Banco Santander said it will no longer hire Andrea Orcel, the outgoing boss of UBS’s investment bank, as its chief executive in a big U-turn just four months after Spain’s largest lender announced his appointment. Santander said the reversal was triggered by the amount that the bank would have had to pay Mr Orcel to compensate him for deferred stock awards that he earned during his seven-year career at UBS, the Financial Times reported.

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The chairwoman and chief executive have resigned, the head of finance has been fired, while the company’s dividend has been slashed and its debt downgraded to junk, the Financial Times reported. It has been a grim few months for Dia Group, the Spanish supermarket chain. The bad news has crushed the group’s shares, which have this year plummeted more than 80 per cent to under €0.70, and pushed down the company’s long-term debt to around half its face value.

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Aryzta, the troubled Irish-Swiss baked goods group, has been urged to halve the scale of a planned €800 million rights issue designed to pay down debt and fund the group through a major restructuring of its operations, The Irish Times reported. Cobas Asset Management, the Spanish group that is Aryzta’s largest single shareholder, said on Monday that it is requesting an extraordinary general meeting of shareholders to reduce the money being raised to €400 million. Cobas owns almost 15 per cent of Aryzta’s voting stock.

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Italy-Spain Debt Spread at 20-Year High

The spread between the cost of Italian and Spanish debt is at its highest level for more than 20 years, in a sign that investors remain unconcerned about the future of the eurozone despite Italy’s spiralling bond yields, the Financial Times reported. Italy’s 10-year yield hit 3.71 per cent on Tuesday, its highest level since February 2014, after the country’s finance minister Giovanni Tria failed to alleviate growing investor jitters over its fiscal position. Short-dated bond yields also rose, although they remain below the highs they hit earlier this year.
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Optimism in Spain’s services sector fell to a five-year low in August, amid rising input costs and a slowdown in new business growth, according to data released on Wednesday by IHS Markit, the Financial Times reported. Spain’s purchasing managers’ index fell to 52.1, below an analyst forecast of 52.7 according to a Reuters poll, as new orders rose at their slower pace since 2016. Although executives felt that the sector had continued to grow overall — a reading over 50 denotes growth — this was at a “much weaker” rate than earlier in the year, said economists at IHS Markit.
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Spanish industrial production increased slower than expected in June, fuelling concerns that the rebound in one of the eurozone’s major economies is losing momentum, the Financial Times reported. Year-on-year the rate of industrial production in Spain rose 0.5 per cent, significantly slower than the 1.9 per cent rise forecast by analysts in a Reuters poll and below the 1.6 per cent rise recorded in May, according to data from the Instituto Nacional de Estadistica. The fall was driven by a 8.3 per cent fall in energy production, and continued the downward trajectory seen since March.
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