The largest Spanish corporate default, Martinsa-Fadesa, a Spanish homebuilder, signals potential risks in SME portfolios, Deutsche Bank analysts said.

According to press reports, the company had debt outstanding in excess of Ä4 billion ($6.3 billion), held mostly by Spanish banks. Martinsa-Fadesa took out the Ä4 billion loan in April 2007 to finance a merger. It now owes approximately Ä2.6 billion that is due in September. The firm also has Ä2.5 billion of normal debt to fund operations.

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