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Pressure mounts on Spain to request aid
Source: Agencies |
September 19, 2012, Wednesday
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Print Edition
Print Edition
INVESTORS yesterday piled pressure on Spain to request aid and trigger a European Central Bank bond-buying program seen as inevitable to help the country finance its debts, with the benchmark 10-year bond rising to just over 6 percent.
Short-term lending costs fell slightly from last month but remained high at auction yesterday, offering little hope the country can finance itself at reasonable levels without seeking assistance.
Spain is at the center of the eurozone debt crisis, now in its third year, with investors concerned that Madrid is unable to bring down its massive public deficit and control its soaring debt levels.
The government has already requested a European lifeline of up to 100 billion euros for its banks, but investors are not convinced that the country can meet its financial obligations and return to economic growth without international financial assistance.
ECB Governing Council member Luc Coene warned against delaying triggering the program on Monday, saying it would not take long for yields to rise if he did.
But Spain's Deputy Prime Minister Soraya Saenz de Santamaria said yesterday the government was still considering the terms of a European bailout, a condition of ECB help, weighing on investors' patience.
"I think we're in a bit of political limbo where markets are just waiting for Spain to ask for help, because ultimately if Spain doesn't ask, the verbal boost from the ECB is going to fade away," according to Jo Tomkins, who is an analyst at the 4Cast consultancy.
Short-term lending costs fell slightly from last month but remained high at auction yesterday, offering little hope the country can finance itself at reasonable levels without seeking assistance.
Spain is at the center of the eurozone debt crisis, now in its third year, with investors concerned that Madrid is unable to bring down its massive public deficit and control its soaring debt levels.
The government has already requested a European lifeline of up to 100 billion euros for its banks, but investors are not convinced that the country can meet its financial obligations and return to economic growth without international financial assistance.
ECB Governing Council member Luc Coene warned against delaying triggering the program on Monday, saying it would not take long for yields to rise if he did.
But Spain's Deputy Prime Minister Soraya Saenz de Santamaria said yesterday the government was still considering the terms of a European bailout, a condition of ECB help, weighing on investors' patience.
"I think we're in a bit of political limbo where markets are just waiting for Spain to ask for help, because ultimately if Spain doesn't ask, the verbal boost from the ECB is going to fade away," according to Jo Tomkins, who is an analyst at the 4Cast consultancy.
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