Spain has made a decision to freeze the beginning of the country's €13.5 billion program to sell state-guaranteed power bonds until government debt-market volatility abates. Bank workers, who had begun calculating investor interest in the first tranche of bonds, will now have to wait until the yield stabilises on the country's debt, reports Bloomberg.
“Going ahead with these bonds would have been almost crazy,” said Ivan Comerma, who manages about €3 billion as head of capital markets at Banc International Banca Mora in Andorra. “It would be better to wait till the waters calm.”
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This decision delays the country's effort to repay approximately €14.6 billion owed to power companies from the tariff deficit. The biggest power producers in Spain, Iberdrola and Endesa, are reportedly owed approximately €3.7 billion and €7.7 billion, respectively, after using their cash and debt to cover the gap between revenue they receive from customers and what has been promised in subsidy by the government. Around €3 billion is owed to other Spanish utilities.
