Review on the Spanish Construction Sector and its Current Challenges

This commentary explores the impacts on companies operating in the construction sector in Spain, considering the current market conditions resulting from a post-Coronavirus Disease (COVID-19) environment.

Key highlights include:
-- Higher construction costs are the result of a combination of the following factors: (1) increasing raw material prices, (2) energy price increases, and (3) rising wages.
-- In light of the increasing Euribor rates, companies without financing cost mitigation measures will incur higher financing expenses.

“These factors tend to interact together generating a cyclical loop, which has resulted in an unprecedented increase in construction costs in Spain”, according to Pablo Santin Filloy, Assistant Vice President of European Corporate Credits at DBRS Morningstar.