Spain Warns Market Access Being Shut, Calls For EU Action On Bank Recap |
| Wall Street Journal - Jun 5, 2012 |
Spain Tuesday urged euro-zone partners to act faster to help support its enfeebled banks, with Budget Minister Cristobal Montoro saying that the government has effectively lost access to capital markets because of steep risk premiums demanded by sovereign bond investors.
In making this dramatic admission, Mr. Montoro joined recent calls by the Spanish government for direct aid from European Union institutions for Spanish banks as the government hopes to avoid a full-blown bailout package. The matter has gained urgency after Madrid was forced into a EUR19 billion euro rescue of lender Bankia SA (BKIA.MC) and as the government's borrowing costs have surged to record highs. Yields on Spanish 10-year bonds were above the 6% mark for the third straight week and at late in Europe, the yield was at 6.26%. By comparison, the yield on the German 10-year bond, considered a haven for investors, was at 1.20%.
"What this premium tells us is that the State, and Spain as a whole, has a problem when it comes to accessing markets, when we need to refinance our debt," Mr. Montoro said in a radio interview. "What that premium says is that Spain doesn't have the market's door open, as such, the challenge is to open that door and regain the confidence of those markets, our creditors."
Speaking later Tuesday in parliament, Spain's Prime Minister Mariano Rajoy said that the European Union needs to quell doubts on the euro's project by reinforcing integration and creating a common banking union and euro-zone bonds. Mr. Rajoy said that Spain plans to continue an ambitious reform drive, but EU partners must also do their part to improve the situation.
Read Full Article from Wall Street Journal
- Posted: 2012-06-05 10:48:03
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