Companies lower their financing costs

Public companies in Spain have been selling shares all year in order to get cheap financing, because it has been very difficult to get credit from the banks. Throughout the year they have been making the most of cash when it becomes available -- as well as a lower risk premium and increased investor confidence.

Yesterday it was made known that Gas Natural, Santander Consumer, Telefónica and Indra sold 1.93 billion euros in debt. Santander Consumer sold the most at a billion euros, followed by Gas Natural at 500 million and Telefónica at 180 million.

Indra sold 250 million in convertible 5-year shares at a 1.75% interest rate. Yesterday several bond issues took place. The number of debt deals shows that investors have confidence in the Spanish economy. More than half of the buyers are foreign institutional investors.

For example, Gas Natural sold 95% of its debt to foreign investors. The debt issues are good news for companies within the country and should provide a much-needed boost for the economy. Of course, only the biggest companies can raise money on the open market while small- and medium-sized companies keep struggling to get credit.

Putting the MARF (the Spanish acronym for a Fixed Income Alternative Market) could be an option, although we will have to wait to see if it works. Companies are showing that they have figured out how to adapt during the crisis and that they are ready to find other ways to raise capital than traditional bank methods, which is an important step toward strengthening business in Spain.