Playing With Fire in Catalonia

A relentless state, angry demonstrations, and profoundly worried businesses.

The ever-worsening political standoff between Spain and Catalonia is beginning to take a toll on credit markets, as banks refuse to renegotiate the terms of loans granted to companies with operations in the separatist region. One of the first victims is the British fund John Laing Infrastructure which, in its 2017 annual report, divulged some of the problems it faced trying to refinance a €700 million loan for work on section two of Barcelona Metro’s Line Nine.

The fund owns 53.5% of the concessionaire operating the fifteen stations on the line’s southern section. One of the main reasons why the banks involved don’t want to soften the credit conditions of the loan is that Barcelona’s metro depends on Catalonia’s regional government for funds. Building on Line 9 began in 2005 but was temporarily halted at the height of Spain’s financial crisis due to a funding shortage. Thirteen years later, the project is still far from complete and further progress is unlikely to be helped by the political chaos engulfing the region.

In the last fortnight alone Pablo Llarena, the Supreme Court’s judge in charge of the main investigation against Catalan secessionists, has indicted 25 Catalan leaders, put five who had previously been released on bail back in pretrial detention (for up to four years), and issued European Arrest Warrants against six pro-independence figures who have fled Spain. They include former regional President Carles Puigdemont who is presently occupying a jail cell in northern Germany awaiting a decision on his extradition

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