2023-08-21 06:03:09
The large Spanish socimis suffer on the stock market due to the new great escalation in the yields of the bonds. The Spanish 10-year contract shrinks the hearts of the most indebted companies in the country. Last week it reached 3.80%, the highest level since 2014, and is getting closer to 4%. A not insignificant possibility that would cause serious imbalance in a real estate sector surrounded by bad news.
As if that were not enough with the bankruptcy of Evergrande in the United States or the forecast of losses of more than 7,600 million euros for the Chinese Country Garden, now the bond rally puts pressure on companies in the sector that have to seek liquidity in the market or refinance your debt. And at this point, the large numbers of the Spanish socimis take their toll on the stock market.
If just a month ago the socimis celebrated the possibility of the end of the rate hike in Europe with increases in the stock market, now the scenario is different. Around 50% of the market opts for the option that the European Central Bank (ECB) may raise rates another 25 basis points in September. How do the large Spanish socimis deal with this scenario?
The net financial debt of Merlin Properties reached 3,935 million euros at the end of the first half of the year, above the 3,792 million at the end of 2022. The ‘loan to value’ (LTV) jumps to the gates of 34%, while the average cost of debt it stood at 2.26%, clearly above the 1.98% as of December 31.
In addition, the group’s liquidity position dropped in six months from 1,856 to 1,034 million euros. In the midst of a debt rally, Merlin has already accumulated six consecutive falls on the parquet (equals its worst series on the parquet last June) and raises the annual loss to almost 7%, although at the moment the value is still well above the lows of the year. The great challenge for the company now is to defend the key support of the 8 euros per share that it lost last Friday,
Until the start of the rebound in debt yields, Merlin was very stable on the stock market around 8.50 euros, consolidating the rebound from the lows in July, when, as now, it came to lose the 8 euros that it puts into play again. now. A situation similar to that of Colonial, to which the bond rally and the Chinese real estate crisis returned to the lowest levels since the first third of July.
The group’s net financial debt at the end of the first semester was 5,228 million euros, almost 6% less than when 2022 ended, and total liquidity (cash plus available balances) of 2,857%, 19% more than a year earlier . Incorporating interest rate hedges, the cost of debt stands at 1.69%, compared to 1.71% in December last year. The stock is losing nearly 8% this year.
The stock market situation of Merlin and Colonial has nothing to do with that of lar Spain. The shopping center specialist amass a large rise of 36% in the stock market in 2023, although it cannot escape the rise in yields in the bond market either. The first impact is that it has lost the key level of 6 euros.
Very little higher are the highs for the year for a group whose net debt remains slightly above 38% of asset valuation. The average maturity is almost 4 years and is referenced to a fixed rate of 1.8%.
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