A rising default rate is one thing. A rising default rate with a falling recovery rate is quite another.
From S&P LCD this morning:
London, Dec. 9 (LCD) - The administrators of Martinsa-Fadesa have submitted a report that values the assets of the insolvent Spanish real-estate company at €7.34 billion, sources said.
According to reports in El Pais, the valuation of the assets is about 30% lower than the figure arrived at earlier in the year by CB Richard Ellis.
It gets worse (emphasis ours):
The administrator values Martinsa-Fadesa’s liabilities to just under 10,000 creditors at €7.156 billion, compared with the €6.3 billion declared by Martinsa Fadesa in July. The report was submitted to creditors last week and lists Martinsa-Fadesa’s assets and liabilities as well as the ranking of the creditors.
…
But some sources said they consider the valuation of the assets to be too optimistic, given the state of the Spanish real-estate market.
Related links:
Property pawn: The demise of Metrovacesa - FT Alphaville
Spanish banks take control of Metrovacesa - FT Alphaville
