Lee Cumbes has been helping the Spanish government to sell its bonds since the depths of its recession three years ago. It has not always been an easy sell, but he is finally confident the Spanish economy is emerging from the doldrums as investors queue up to park their money in Spanish debt.
In January 2015 and January 2014, he helped to raise sums of €9bn (£6.6bn) and €10bn respectively. Spain can wait 10 years before repaying those debts, yet a debt issuance yesterday of €7bn will not have to be repaid until 30 July 2030.
“Those are really big transactions, huge statements of prevailing market sentiment and very high profile. There were more than 350 investors participating in each transaction, all willing to commit significant amounts of money to support Spain and show the trust they place in the Spanish recovery story,” Cumbes – who is Barclays’ head of sovereign supra agency debt capital, the only UK bank on the deal – told City A.M.
“Today, the 15-year is a step further on – you’re investing for a longer term so the degree of trust you have to have in that credit is higher, and I think it’s been an unequivocal answer,” he said.
While financial market sentiment in Spain is picking up, manufacturing is making headway, too. Ford plans to boost production at its Valencia plant by 40 per cent this year.
“Business at the Ford Valencia facility is thriving,” Tony Ades, director of the site, told City A.M.
“Ford has invested €2.3bn since 2011 in the site – the biggest investment ever in the Spanish auto industry – and this year we will complete the launches of S-MAX, Galaxy and Vignale Mondeo, thus building six Ford models simultaneously, up from three last year.”
The factory is aiding Spain’s exports, with 80 per cent of the vehicles produced there being sold to more than 70 markets around the world.
Not only is output rising, the site in Spain has taken on around 3,000 people since early 2013. There has even been knock-on effects, with the supplier park located next to the plant hiring a further 1,500 people over the past year.
Back in 2012, Prime Minister Mariano Rajoy undertook sweeping reforms of the country’s jobs market and made painful cuts to government spending. Earlier this week, Rajoy talked up Spain’s recovery as the government hiked its 2015 growth forecast to 2.4 per cent from two per cent.
“Spain has passed from being a country on the brink of bankruptcy to a model of recovery that today provides an example to other countries in the European Union,” he said.
Economists also see good things ahead for Spain.
“Like Britain after Thatcher, Germany after Schroder, Spain is on the road to lasting success, having reformed its labour market,” Holger Schmieding, chief economist at Berenberg Bank, told City A.M.