STOCK MARKET WATCH, Friday, December 16, 2011

[Ghost Dog]

26. Spain Unpaid Bills May Haunt (new PM) Rajoy as States Crave Liquidity

... Spain’s 8,000 municipalities and 17 semi-autonomous regions are suffering from a liquidity squeeze as many are shut out of markets, prompting them to delay paying suppliers. Regions’ debt rose 1.5 percent to 135 billion euros ($176 billion) in the third quarter, the Bank of Spain said today. Catalonia had the highest debt, at 39.3 billion euros.

Companies are being paid 157 days late on average, about three times the legal payment delay, according to the Platform Against Late Payment, a federation of employer groups, and pharmaceutical companies say they are owed 5.83 billion euros by public hospitals. While Rajoy has pledged to help local administrations pay suppliers, that may add to the state’s debt burden and undermine efforts to lower sovereign borrowing costs.

“Rising commercial debt means there is more deficit and that the risk of missing deficit targets increases,” said Marisol Blazquez, an analyst at rating company Moody’s Investors Service in Madrid. “Apart from the Basque country, the Madrid region and Galicia, all the regions we rate are having liquidity issues.”

The yield on Spain’s 10-year bonds eased to 5.164 percent as of 10:30 a.m. in Madrid from 5.433 percent yesterday. It rose to a euro-era record of 6.78 percent on Nov. 17.

/... http://www.bloomberg.com/news/2011-12-16/spain-s-unpaid-bills-may-haunt-rajoy-as-regions-crave-liquidity.html