Spain's (A/Stable) macroeconomic backdrop is increasingly supportive of corporate financing, particularly for large, capital-intensive issuers with strong access to global capital markets, Scope says in its latest corporate credit outlook for Spain, available for download here.

“The 10-year risk premium on Spanish government bonds has declined to its lowest level in a decade at around 60bp – placing Spain below France, Italy, and the UK – supporting relatively favourable domestic financing conditions,” says Jakob Suwalski, Executive Director at Scope.

In this context, credit fundamentals for Spanish corporates are strengthening, underpinned by robust momentum in domestic growth. A key factor is the resilience of Spain’s services sector, which provides a buffer against external shocks such as the recent escalation of US tariffs on global trade.

“Debt in the non-financial corporate segment has also fallen sharply, down by half to 60% of GDP in 2024 from 120% in 2010, with improved debt-to-net assets ratios reflecting more stable capital structures. This sustained deleveraging shows robust financial discipline despite recurrent recent shocks,” says Mikel Zabala, Associate Director.

Large Spanish firms well positioned for growth; SMEs face funding challenge

The combination of easier financing conditions since mid-2024, after the tightening brought about by the 2022 inflationary shock, and stronger corporate balance sheets has ensured that Spanish firms, particularly larger corporates, have healthier risk profiles and are well positioned for growth.

“The challenge, however, is that Spain’s capital markets remain shallow – notably for small and medium-sized enterprises (SMEs) – limiting broader access to bond financing and reinforcing reliance on bank lending. This structural weakness continues to constrain the development and diversification of Spanish corporate’s funding sources,” says Zabala.

Non-financial corporates had one of the lowest levels of bond market use among major EU economies, with outstanding debt securities at EUR 125bn (8% of GDP). This is well below France (25%), Netherlands (19%), and UK (14%).

Spain’s alternative fixed-income market, known as the MARF, has played a valuable role in expanding financing options for SMEs, but the recent stagnation signals the need for renewed efforts by the authorities to stimulate the segment.

Power grids, data centres, tourism, water projects likely to lure investment in Spain

Looking ahead, current favourable macro and financing conditions could support modest re-leveraging, especially in capital-intensive sectors such as utilities, infrastructure, data, and real estate.

Scope sees significant growth and investment opportunities related to these sectors: electricity grids, data centres, tourism and water- and waste-management in Spain and large-scale infrastructure projects abroad.

These are also parts of the economy that are likely to benefit from EU green funding, with Spain among the largest recipients of Recovery and Resilience Facility funds. Stable regulation and effective project execution will be important for translating this potential into sustained growth.

“However, in any investment upswing, maintaining financial discipline will be key for corporates to avoid undermining their credit quality amid geopolitical turbulence, uncertainty in international trade and sluggish growth among many of Spain’s trading partners in Europe,” says Zabala.