(Reuters, Madrid 1st April 2011) – According to the international news agency Reuters, the Catalan government is planning to launch a 2.7 billion euro retail bond this month of April, following declaration from the spokesman from the Catalan government on Friday last week. The spokesman added that the bond would have maturities for one year, paying 4.25 percent, and for two years, paying 4.75 percent. The two-year tranche will be capped at 1.066 billion euros.
In mid-March Catalonia’s new Economy Secretary Albert Carreras told Reuters Catalonia is paying too much to refinance its debt and would look to carry out roadshows overseas to spur interest in the region. Now worldwide potential investors are watching the Catalan finances closely; their major concern is finding signs we may be unable to cut spending and help the Spanish government meet its EU agreed deficit targets. So it seems, the new government of Artur Mas is taking serious measures about the deficit problem, as they have the impression that Catalonia will play a major role in economic and business recovery for the all the regions under Spanish administration.
Catalan savings banks La Caixa, Catalunya Caixa and Unnim, along with Banc de Sabadell and Barclays Bank, will manage the placement. Reuters IFR service has published that Catalonia was one of nine Spanish regions which missed their deficit targets last year and so it needs to refinance around 4.3 billion euros this year. On the other hand, the fiscal conditions of the Basque nation allowed them to fulfill deficit targets in 2010, which should be proof enough of the imminent need of rebuilding the current fiscal and funding conditions for the Catalan nation. Why is the Spanish administration so fearful of allowing the Catalan government to have a similar system like the basques do? Many experts believe that Spain would stop receiving such an amount of Euros that would force the Bourbon king to sell 3 quarters of all the royal family properties to compensate the loss on a yearly basis and keep the Spanish state running.