SPAIN Trends and Developments Contributed by: Antonio Paredes, Carlos Saldaña, Manuel Martínez and Román Mejías, ZADAL
ing work, where lenders look for control of collateral and a path to a sale or a new plan. Energy transition and infrastructure continue to gen - erate financings, and there is also a flow of stressed situations. Some projects face refinancing pressure, cost pressure, or business plans that need adjust - ment. This creates opportunities for lenders that focus on special situations and on downside control. Sponsor-backed platforms in services, healthcare, and software remain a source of transactions. These deals often combine acquisition finance with follow- on needs, which can suit private credit structures. They also require alignment between financing terms and the business plan for add-ons. Competition Between Funding Sources Competition between banks and private credit is a constant feature. Banks remain central across the market, and they continue to compete across many credits. Private credit competes where a bank cannot lend, cannot lend within the needed timetable, or can - not offer terms that fit the transaction. In practical terms, many standard deals go bank-led, while private credit is used for deals with novelty, com - plexity, or stress. This includes bridge needs, carve- outs, assets with operational transition, and credits with a restructuring angle. The dividing line is not one of size, but rather whether the transaction fits within a bank’s credit parameters. Transaction Approach and Documentation Process Private credit deals in Spain are negotiated with a focus on execution steps and enforceability. Borrow - ers and sponsors expect a lender that can move on diligence and documents within the transaction time - line. Lenders expect information flow that supports monitoring and, if needed, action in a downside sce - nario. The documentation process tends to be bespoke. The terms may borrow concepts from international tem - plates, but they are adjusted to the group structure, the collateral map, and the corporate constraints that apply in Spain. This is one reason why lender-side
and borrower-side teams spend time on definitions, baskets, and intercreditor terms. Where more than one debt layer exists, lender co- ordination becomes part of the core documenta - tion. Intercreditor agreements and related mechanics define voting, payment waterfalls, enforcement con - trol, and transfers. The use of a security or collateral agent also matters, because it supports administra - tion and enforcement for a lender group. Terms and Events of Default Documents in Spanish private credit usually contain a wide set of undertakings and events of default. They address reporting, cash leakage, security main - tenance, additional debt, disposals, and changes in ownership. The aim is to manage risk before a pay - ment default occurs. A practical point is how acceleration is treated when the default is not non-payment. In the past, some market participants viewed Spanish courts as more comfortable with acceleration in core pay - ment defaults and in a narrow set of other breaches. Recent Supreme Court guidance in corporate finance supports enforcement of agreed acceleration for non- monetary defaults in business-to-business contracts, subject to limits such as good faith and no abuse. For lenders, this supports drafting that gives mean - ing to non-payment defaults. For borrowers, it raises the importance of cure periods, clarity of triggers, and proportional exercise of rights. For investors, it reduces one source of uncertainty, while leaving the need for case-by-case analysis. Security and Collateral Security in Spain is built by type of asset. The package often includes share pledges, pledges over accounts and receivables, and mortgages over real estate when available. Guarantees from group companies are also common, subject to corporate benefit analysis and acquisition finance constraints. Mortgages are a central tool in real estate financ - ings. They involve notary and registry steps and may involve stamp duty depending on how the document is structured. In many real estate transactions, lenders
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