Fitch: Spain restructuring law may hurt SME and mortgage recoveries
- Announced by the Spanish government to facilitate debt refinancing and restructuring agreements may affect the recovery expectations and cash flows of SME CLO securitisations and mortgage cover pools, Fitch Ratings says. The reforms may make SME funding scarcer or more expensive.
- The initiative eases the process by which refinancing and restructuring agreements between companies and bank creditors are formalised ahead of any insolvency proceedings. It requires the SME business to be viable after the restructuring and that the terms are accepted by at least 51% of financial creditors. These alternatives are not possible on debt to commercial creditors or on public sector obligations. The reform was enacted in Royal Decree 4/2014,
dated 7 March 2014.