Monday, October 10, 2011

Spain Drugmakers Plan $7 Billion Unpaid-Bill Securitization - BusinessWeek

Oct. 4 (Bloomberg) -- Spain's pharmaceutical lobby is negotiating with authorities on a plan to sell state-guaranteed securities backed by 5.4 billion euros ($7.1 billion) of unpaid bills, Farmaindustria Director General Humberto Arnes said.

The group, which represents companies including the Spanish units of Roche Holding AG and Novartis AG, is in talks with the regional governments that owe the debt and the central government, Arnes said in an interview in Madrid today. The aim is to bundle the unpaid bills into a vehicle that would issue securities guaranteed by the central government and channel the proceeds to the companies, he said.

“It would allow the payment of the debt to be deferred by several years and has a government guarantee which allows it to be sold in the market,” Arnes said. “The mechanism allows a delay until Spain is in a financial and economic situation that allows it to face the pharmaceutical bill.”

Spain's regional governments are struggling to pay suppliers as the collapse of the real-estate boom has slashed their tax revenue while access to capital markets has narrowed. The regions, which control health and education, have racked up record amounts of debt during the crisis, and together owe more than twice what they did in 2007, Bank of Spain data shows.

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