The time has come to “debunk the risks surrounding Spanish companies”, a Telefonica executive has told delegates at a Paris conference.
GTR was in the audience as Javier Santiso, a managing director at the Spanish telecoms giant and a leading economist of emerging markets, said that it was untrue and unfair to say Spanish corporates were uncompetitive in the trading world, and called on their significance to be acknowledged.
In line with the turmoil the wider Spanish economy has faced in recent years, the Spanish corporate sector has been criticised for being mismanaged and, in more extreme views, laziness.
Santiso highlighted Spanish textiles giant Zara, which was established in 1975 and bucked the trend of East Asian offshoring in favour of Latin American and near-shore production, and is currently valued at more than US$7bn, as an example of innovation in the Spanish corporate world, while also praising the high-level and quality of tech start-ups in the country.
“Spain is fertile ground for the entrepreneur,” Santiso said, while emphasising the fact that risk premiums for Spanish companies have fallen from 600bps at the height of the crisis to below 200bps now.
In the lending markets, the quality of some Spanish borrowers has been borne out by the ticket size they’re able to secure. Last year, Telefonica itself opened a US$1bn-plus ECA- backed facility with BNP Paribas, BTMU, Santander and Société Générale.
Furthermore, Spanish construction firms have continued to win big contracts abroad. Last year, Fomento de Construcciones y Contratas, one of Spain’s largest construction groups, won a US$7.82bn contract to build three lines on the Riyadh Metro, despite being heavily indebted.
Spanish firms have also had significant involvement in the recent raft of transport projects in Ho Chi Minh City. In 2009, Ardanuy Ingenieria was awarded a feasibility study contract for line four of the city’s metro system at a cost of US$1.2bn, while in the same year, Idom Ingenieria Consultoria won a contract to conduct feasibility studies for line five and six at a cost of US$1.7bn.
That’s not to say the country’s exports sector has emerged unscathed from its sovereign debt crisis. The Spanish government is currently looking at ways in which it might privatise the remaining state-owned part of its ECA, Cesce, with a hope to pushing the sale through by the end of the year.
Cesce is currently 50.26%-owned by the state, but in a move to further reduce government expenditure, Madrid is seeking to offload the rest. Current private shareholders include BBVA (16%) and Santander (21%).