Ferrovial has sent the document of its reverse merger project and transfer of headquarters to the CNMV with a disturbing forecast: curves are coming in the markets. “By relocating its parent company to the Netherlands, the Ferrovial Group seeks to improve its financing conditions, particularly at a time when central bank balances are contracting,” the Spanish company said in a document. The quote refers to the fact that the ECB is withdrawing from public debt auctions since this month and that caused an increase in interest on bonds.
The reasoning of the Spanish company to justify its move from Madrid to Amsterdam incorporates the prospect of tensions in the debt market due to the increase in interest rates, but above all the withdrawal of the European Central Bank (ECB) as the largest buyer and financier since 2020 of countries like Spain, which has benefited from the purchase of more than 200,000 million euros from the monetary authority.
The ECB’s activity has been vital to keep debt returns (interest) under control and also risk premiums (differentials between countries) due to the Covid-19 pandemic, but also so that countries like Spain have been able to finance themselves in the markets and pay for the imbalance in their public accounts. Only in the period from 2018 to 2022, the public debt in Spain has skyrocketed by 300,000 million euros, up to 1.5 trillion. In relation to GDP, it has risen from 95 to 115%.
In addition, Ferrovial ensures that companies based in the Netherlands “have benefited from lower volatility in their financing costs thanks to a more stable country risk premium compared to other European countries. This lower volatility should translate into, in the future, the financing costs of the company’s debt issues will be reduced and, in the long run, also in improvements in the total cost of capital”.
Ferrovial has raised a stir with its merger that has provoked a reaction from the Government, which has described the company’s explanations as “ridiculous”. But his merger project exposes the CNMV and the Spanish market BME, now controlled by the Swiss Six in an operation that had the support of the Executive of Pedro Sánchez.
Ferrovial also argues that the relocation to the Netherlands will allow it to access “a broader investor base”, attract a greater number of international talent to its workforce and strengthen contact with other multinationals in Amsterdam, which has become a new international hub within the euro to replace the City of London.
“In addition to the advantages offered by considering the Ferrovial Group as the domicile, the Netherlands constitutes an optimal platform for the FISE Shares to be traded simultaneously in Spain, the Netherlands and, when the time comes, also in the States that the condition of a Dutch listed company will facilitate the future admission to trading of those same shares in the US and, if the conditions for this are met, their inclusion in the US stock indices”, explains the company in its project.
Dart to BME for its obstacles to listing in the US
Ferrovial charges indirectly against BME, owned by the Swiss Six, which has remained isolated in the interconnections with other international stock markets. The listing process on the pan-European Euronext stock exchange (Paris, Amsterdam, Brussels, Lisbon) allows the homologation of most of the paperwork and the necessary requirements to later be listed on Wall Street. The Spanish company Lleidanet made the leap to the US in 2020 from Euronext with a direct ‘listing’ that allows it to be listed in 3 countries at the same time, but which facilitated liquidity for some of its shareholders such as Santander and SEPI to sell their percentages .
Ferrovial regrets the situation of the Spanish BME Stock Exchanges. , which continues to register declining volumes in stock trading since 2020. and ADRs are not eligible to access US stock indices,” the construction and engineering group said in its presentation.
Ferrovial assures that “listing in the United States is a strategic objective” because a large part of the current business originates in the United States and they foresee even more in North America. “92% of the investments committed for the period 2023-2027 are associated with this geography, with key growth projects such as the new Terminal One at JFK airport in New York, the I-66 highway in Virginia and the North Tarrant Express highway 35W 3C in Texas”, sentence.