The Valencia property developer Llanera has become the first high-profile victim of the credit crunch in Spain, declaring insolvency yesterday after failing to meet payments on €748m of debt.
The fashionable builder, known for its links to Charlton Athletic Football Club, was unable to reach agreement with Lehman Brothers and other banks on a refinancing deal, a sign that foreign creditors are no longer willing to underwrite Spain's property market.
The fashionable builder, known for its links to Charlton Athletic Football Club, was unable to reach agreement with Lehman Brothers and other banks on a refinancing deal, a sign that foreign creditors are no longer willing to underwrite Spain's property market.
Llanera said it faced "extreme difficulties" as a result of reliance on short-term borrowing. Credit costs have shot up since the collapse of the market for commercial paper and CDOs (collateralised debt obligations).
It blamed the squeeze on the "evolution of the Spanish property market and the relentless increase in Euribor". The Euribor rate, used to price floating rate mortgages in Spain (98pc of the total), has jumped to a six-year high of 4.72pc.
Eight rate rises by the European Central Bank since December 2005 have taken their toll, but the final blow was the sudden widening of Euribor spreads by an extra 70 basis points over ECB rates since the summer squeeze.
It blamed the squeeze on the "evolution of the Spanish property market and the relentless increase in Euribor". The Euribor rate, used to price floating rate mortgages in Spain (98pc of the total), has jumped to a six-year high of 4.72pc.
Eight rate rises by the European Central Bank since December 2005 have taken their toll, but the final blow was the sudden widening of Euribor spreads by an extra 70 basis points over ECB rates since the summer squeeze.
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