Global economic downturn hits Spain’s top developer

Recession looms as one of Spain’s largest property firms seeks bankruptcy protection after it failed to secure a loan needed to refinance its massive debt.

The collapse of Martinsa Fadesa, which has 5.4 billion euros of debt, is one of the largest corporate failures in the country’s history.

The effect on the markets was immediate, with Spanish Banco Popular – a major creditor to Martinsa – and the country’s leading real estate shares opening down over 6 percent this morning.

With house prices expected to drop by more than a third in the next three years, some analysts say Martinsa’s fate marks the start of what could be Spain’s worst crisis in decades – as the eurozone feels the effects of the global economic downturn.