Yields Could Push Spain into Seeking Bailout

Spain’s Prime Minister Mariano Rajoy on Wednesday said he was ready to seek a new rescue package for his troubled country but only if its debt financing costs remain too high for too long.

Investors have been jittery that Spain’s apparent reluctance to seek a bailout — a condition for European Central Bank action to cut the country’s borrowing costs — could propel the euro zone into even deeper trouble.

Rajoy had said previously that a reduction in Spanish bond yields after the announcement of a bold bond-buying plan by the ECB could allow Spain to put off seeking further support.

“I can assure you 100 percent that I would ask for this bailout,” he told The Wall Street Journal.

He, however, added that it was too soon to say if Spain would need an ECB and euro zone rescue funds bond-buying program and that he still needed to check that strings attached to it are “reasonable”.

Rajoy spoke as protesters clashed with police in Spain’s capital after thousands formed a human chain around the parliament and demonstrated against a new round of austerity measures for the 2013 budget to be announced on Thursday.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza