Catalonia signs loan as first part of debt package

Mon Mar 28, 2011 2:44pm EDT

 MADRID, March 28 (Reuters) - Spain's indebted north-eastern
region of Catalonia issued 800 million euros in debt on Monday,
the first of a package of debt refinancing it needs to do this
year, spokesman from the Catalan Regional government said.
 Catalonia took a four-year 400 million euro ($562 million)
loan from Banco Santander (SAN.MC) and issued a two-year bond
worth 400 million euros with a 5.5 percent yield, which was
mostly sold to Spanish investors.
 Investors are nervously watching the finances of Spain's
regions closely for signs they may be unable to cut spending
and help the central government meet its EU agreed deficit
targets.
 The Catalan government did not provide further details of
the bank loan, but a source with knowledge of the deal said the
loan would form part of a package to meet the 1.9 billion euros
of debt the central government has given the go-ahead for
refinancing so far this year.
 Catalan savings bank La Caixa, together with Deutsche Bank,
Ahorro Corporacion, Natixis and LBBW lead sale of the bonds,
with 70 percent going to Spanish investors, and 30 to non
Spanish investors mostly based in Scandinavia.
 Other options were being explored to meet the rest of that
sum, which could include the launch of a syndicated loan or
more bond issues, which would be launched as soon as possible
depending on market conditions, the source said.
 Catalonia was one of nine regions in Spain that missed
their deficit targets last year and needs to refinance around
4.3 billion euros this year according to Reuters service IFR.
Catalonia is expecting approval to refinance the rest of its
debt in the next few months.
 In mid-March Catalonia's new Economy Secretary Albert
Carreras told Reuters the region was paying too much to
refinance its debt, and would look to carry out roadshows
overseas to spur interest in the region. [ID:nLDE72D1D1]
 Catalonia represents around one fifth of the country's
gross domestic product and is home to its largest industrial
centre.
 It signed a one billion euro syndicated loan in July last
year led by La Caixa and BBVA (BBVA.MC).
  (Reporting by Nigel Davies; additional writing by Jonathan
Gleave; Editing by Andrew Hay)