Financial markets have swung their attention towards Spain after the Catalan regional government held a contested independence vote on Sunday, setting it on a collision course with Madrid, the Financial Times reported. Investors have been spooked by the possibility of Catalonia, a region with an economy roughly the size of Portugal, breaking away from Spain, risking a constitutional crisis and derailing its recovery from a severe recession. Madrid-listed shares are under pressure while yields on debt issued by the Spanish and Catalan regional governments have risen.

Business in Catalonia has warned that political instability, violence and legal uncertainty could deter investment and hurt the economy, as tensions escalate ahead of the region’s planned independence referendum on Sunday, the Financial Times reported. The region, one of Spain’s richest, has an economy the size of Portugal and its government has promised to declare independence within 48 hours of a Yes vote — despite Spanish courts ruling the referendum illegal and Madrid’s plans to prevent the vote.

Brazil’s Mines and Energy Ministry has canceled nine licenses to build transmission lines that had been granted to Spain’s Abengoa SA after the company abandoned construction works in 2015, a senior official said on Wednesday. The decision formalizing cancellation of the licenses was published in the Wednesday edition of the official gazette, Reuters reported. The cancellation will not exempt the company from paying legal fines related to projects, according to the decision. The company did not have an immediate comment on the cancellation of the licenses.

When Juan Velayos left his job at the accountancy firm PwC to become chief executive of Spanish housebuilder Neinor Homes two years ago, some people thought he was crazy. Construction companies in Spain once built more residential homes every year than the rest of western Europe combined, fuelled by cheap debt. But a 35 per cent slump in prices after the 2007 financial crisis left much of the sector bankrupt, the Financial Times reported.

A group of bondholders in failed Banco Popular have filed an appeal against Spain’s banking bailout fund, their law firm said on Thursday, after the bank’s rescue landed them with 850 million euros ($1.02 billion) of losses, Reuters reported. European authorities orchestrated a rescue of Spain’s then sixth-biggest lender in early June which wiped out shareholders and junior bondholders while Popular was sold for a nominal one euro to larger rival Banco Santander.

When EU authorities wiped out some of Banco Popular’s bonds last month, it looked as if credit default swaps might finally compensate bank debt investors for their losses with little controversy, the Financial Times reported. Credit derivatives written against the failed Spanish lender’s junior debt were triggered in a matter of days and, given that these bonds were now worthless, it seemed self-evident to many that owners of the CDS would get paid in full.

Bankia and CaixaBank sold a combined €1.75bn of subordinated debt less than a month after similar securities were torched at Banco Popular, in a clear sign of the market's maturity, Reuters reported on an International Financing Review story. State-owned Bankia achieved the lowest ever coupon for a Spanish public Additional Tier 1 bond sale, the riskiest debt that banks can issue, beating national champions Santander and BBVA. The €750m no-grow perpetual non-call five-year (rated B+ by S&P), its inaugural AT1, priced at 6%.

CaixaBank is marketing the first Spanish Tier 2 since subordinated debt was wiped out at Banco Popular in June, and just a day before Bankia is expected to bring its inaugural Additional Tier 1, Reuters reported. Orders of over €2.75bn by the 11NC6's second update implied that investors are willing to overlook the punitive treatment of Tier 2 debt at Popular, even for second tier lenders. "It is a good credit and I'd expect it to go well, and the price looked fair," said a banker off the deal.

Talks between Spanish real estate company Reyal Urbis and its lenders have broken down, leaving the company just one step away from full liquidation, a source with knowledge of the talks said on Wednesday. Real Urbis has been in bankruptcy proceedings since 2013 and executives at the company have been in talks with its creditors in a last ditch attempt to avoid liquidation, which is likely to be triggered after they failed to get a majority of lenders on board for an agreement, Reuters reported.

Spain is calling for “aggressive” and rapid reforms of the single currency area, including the creation of a powerful pan-European treasury and a mechanism to force through labour market and other reforms in recalcitrant member states, the Financial Times reported. “We have a window of opportunity of no more than six months after the German elections [in September],” Luis de Guindos, the Spanish economy minister, said in an interview.