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Wednesday 3 October 2012

Berlin sees no 'clear signs' from Spain on bailout: source


"We do not have clear signs from Spain," the source said, indicating it was unlikely Madrid would make such a bid by October 8 when eurozone finance ministers are due to meet.
Berlin has commended austerity measures in recession-mired Spain, arguing the country, the eurozone's fourth biggest economy, was suffering above all from a lack of confidence on the financial markets.
"We do not have the impression that a very convincing case could be built in favour of a request for aid for Spain at a time when the country is managing to raise financing on the markets," the source added.
Spain passed a major bond market test on September 20 when it borrowed 4.8 billion euros ($6.2 billion), paying sharply reduced interest rates for the critical long maturity of 10 years.
It will face an auction of medium-term bonds Thursday.
The German government source commented that the European aid programmes were "not there in order to give everyone the same interest rate. They are there to avoid bankruptcy."
The Spanish government has already struck a deal with its eurozone partners for a rescue loan of up to 100 billion euros for its banks but is under pressure from markets and some European partners to seek a full-blown rescue.
European Union economics chief Olli Rehn told Madrid Monday that European powers were "ready to act" if Spain sought a sovereign bailout.
In late Wednesday trade, Spain's borrowing costs over 10 years were at 5.69 percent, well below the seven-percent level deemed likely to trigger a bailout request.



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