Spain. Law & Practice

The key players on the lenders’ side remain Spanish banks. In larger transactions, a group of international banks have traditionally been very active in the Spanish lending market.

However, deals involving alternative funds, debt funds, direct lenders and other non-banking lenders have continued to increase over the years, and it looks like this trend is now consolidated in the market. The price remains marginally higher, although alternative lenders are gradually offering competitive pricing that, in many cases, is not so far from banks’ prices, especially after the increase the interest rates experienced in 2023 and 2024.

Agreements offered by alternative financiers tend to be covenant-lite, offering fewer restrictions and more flexibility to borrowers – filling the gaps left by banks after the financial crisis, eg, financing the acquisition of land for real estate development, providing bridge facilities or financing high leverage acquisitions, bridge to equity and other types of hybrid financings (mezzanine, convertible, PIKs, etc).

It can now be said that direct lending is here to stay and the traditional banking system is evolving to accommodate and compete with these new actors.

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