Spain in no rush to seek sovereign bailout | Business| Economy and finance news from a German perspective | DW | 07.09.2012
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Spain in no rush to seek sovereign bailout

The Spanish government has said it will take all the time it needs to study the implications of recent ECB moves. The central bank makes it bond-buying program dependent on recipients applying for a sovereign bailout.

The government in Madrid signaled on Friday it would analyze very carefully whether seeking a bailout for the eurozone's fourth-largest economy could eventually be an option to consider.

"These are decisions that cannot be taken off the top of your head nor overnight," Deputy Prime Minister Soraya Saenz de Santamaria told reporters after a cabinet meeting. "Matters that are so important for the public interest and for the future of Spaniards must be analyzed with calm and prudence."

Her comments came on the back of a meeting of ECB executives Thursday where the central bank's Mario Draghi announced the resumption of a controversial bond-buying program. But Draghi said in order to reactivate the scheme, debt-stricken nations hoping to profit from it must first formally apply for a sovereign bailout from the euro area's rescue funds.

Redemptions ahead

Analysts said Spain was under enormous financial pressure as it faced 30 billion euros ($38 billion) in repayments in October. On the other side, high borrowing costs recorded in earlier auctions of sovereign debt have now come down to lower levels, giving Madrid more time to breathe.

Spanish 10-year bond yields dropped below six percent for the first time since May, following the announcements made by the European Central Bank.

"The fact that Draghi's words alone have brought back calm shows that it was what had to be done," Foreign Minister Jose Manuel Garcia-Margallo said in a statement, adding that the question of a Spanish bailout would be taken up again at a meeting of eurozone finance ministers in Cyprus on September 14.

hg/dr (AFP, Reuters)