The Spain holdings are intriguing. The interest payments ate about 1.7 times covered by income, yet they are just over the bankers loan/asset value covenant. The lender is RBS, which has been in more trouble than a blind rat in a snakepit in the last year or two. The UK govt owns it now, pretty much, with about a 70% interest. It wasnt loans like the AEZ Spanish holdings that caused it though. If I was a lender, I wouldnt have any problems with a debtor whose rent was 1.7 times the monthly payment, with diversified retail tenacies including large stable supermarkets. Not in this market anyway. Better to have safe mortgage interest cash flow than a potential capital loss that would come straight off the banks NAV, by pushing a property unneccesarily onto a very bad market. But then Im not a banker. It all seems a bit overdramatic to me, the attitude of the banks. These loans look pretty safe. Just roll em over till the sun shines again, take the monthly vigorish and shut up. Concentrate on some real problems.
AEZ Price at posting:
2.9¢ Sentiment: None Disclosure: Held
