The Catalan Bailout. 31.08.2012
The Catalan Bailout
By Xavier Sala-i-Martín
For months, all major Spanish companies such as Telefónica, Gas Natural, Abertis, ACS, etc, have had the international financial markets closed. That is, private investors do not want to lend them money at any price. And this is independent of the sector in which they operate or the state of their economic health (after all, they all have run out of credit regardless of their industry and the state of their finances). The reason is simply that they are Spanish: investors think that the possible collapse of the Spanish economy puts Spanish corporations at risk of collapse and, therefore, they optimally choose not to lend them money. And that is true even if some of these companies (such as Telefónica or Natural Gas) derive most of their revenue from outside Spain. Moody’s said it clearly makes a couple of months “Telefónica’s rating can only be a step above the rating of the government of Spain.”
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