SPAIN Law and Practice Contributed by: Miguel Cases, Toni Barios, Joaquín Fabré and David Navarro, Cases & Lacambra
through senior secured and unsecured loans, mez- zanine debt facilities, bridge loans, profit participating loans and subordinated debt. Since alternative credit providers are not subject to capital and liquidity requirements and the prudential regulation that applies to credit institutions, the offer of flexible private debt structures by direct lending participants is complimentary to that offered by tra- ditional banks. The number and specialisation of alternative credit providers active in the Spanish market is expected to keep growing in the coming years. 1.5 Banking and Finance Techniques The circumstances of each transaction (ie, investor base, the purpose of the financing, the needs of the borrowers, and the collateral and guarantee support) will determine the most appropriate loan structure. Loan facilities in Spain usually include different tranch- es to cover the needs of the borrowers, including term loans, credit facilities (revolving or not), issuance of letters of credit and ancillary banking products such as factoring and confirming. The loan facilities can co-exist and be complementary to debt securities financings. 1.6 ESG/Sustainability-Linked Lending Green loans (ie, those made available to finance or refinance new or existing eligible green projects) and sustainability-linked loans (ie, those incentivising the borrower’s ESG performance by linking the margin to certain pre-defined “sustainability performance tar- gets”) keep growing. Sophisticated lenders promoting Sustainability-Linked Loans (SLL) in Spain have been generally following the Sustainability-Linked Loan Principles (SLLP) that the Loan Market Association (LMA) has been promoting since 2018. Notwithstanding the efforts made by the LMA including the latest update of the SLLP in Feb- ruary 2023, the publication of the Draft Provisions for Sustainability-Linked Loans in May 2023, of the Term Sheet for Draft Provisions for Sustainability-Linked Loans in October 2023 and of the Sustainability Co- ordinator Letter in April 2024, the lack of clarity and
market standards in Spain pose some difficulties in the implementation of SLL, resulting in the relevant provisions to adjust the loan to the SLLP being negoti- ated by the parties on a case-by-case basis. 2. Authorisation 2.1 Providing Financing to a Company Providing financing to companies is not a regulated activity in Spain, and therefore both foreign and Span- ish banks and non-banks can provide financing to Spanish companies. Notwithstanding, when considering providing financ- ing to a Spanish company, non-banking lenders need to be aware that not all types of creditors can benefit from certain Spanish security interests, such as float- ing mortgages and financial guarantees. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans In accordance with Spanish Law 19/2003, dated 4 July, on legal regime of movements of capital and economic transactions abroad and on certain meas- ures for prevention of money laundering, any acts and transactions between residents and non-residents in Spain that imply or from the fulfilment of which foreign collections and payments may derive, are free. In any case, such acts and transactions shall be pro- hibited or limited in respect of third countries in rela- tion to which the Council of the European Union has adopted the relevant restrictive measures in accord- ance with EU legislation. According to Spanish Law 10/2014, dated June 26, on the regulation, supervision and solvency of credit insti- tutions, it may be necessary to require authorisation from the Bank of Spain in order to operate in Spain. This should be analysed on a case-by-case basis. Credit institutions domiciled in the EEA may usually passport their services subject to mutual recogni- tion, but that is not generally possible for those credit institutions domiciled outside the EEA. In general, the
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