Catalan premier Artur Mas on Friday urged the government to set up a mechanism that allows Spain’s regions to tap the financial markets to meet the payment of maturing debts.
“I don’t care what sort of mechanism it is, but we have to make payments every month,” Mas said in a meeting with reporters working for the foreign media. “The economy can’t recover if you don’t pay your bills.
The regions have been pushing the government to approve the creation of so-called hispanobonds, which would be issued by them but guaranteed by the central government. This would allow them to access the debt market at rates close to those of the sovereign. Valencia was recently forced to offer yields of over seven percent to raise 500 million euros in shorter-term bills, more than that paid by bailout recipients Greece and Portugal.
Catalonia, which accounts for about a fifth of Spain’s GDP, is facing debt maturities of some 13.4 billion euros this year.
On its website, Britain’s Daily Telegraph interpreted Mas’ comments as a call for a bailout, prompting the Catalan government, known as the Generalitat, to issue a statement complaining that the some media has misinterpreted the premier’s remarks and had taken them out of context.
“The Generalitat of Catalonia is complying strictly with its financial program and will honor its commitments,” the statement said. It also pointed out that the central government is in debt to Catalonia, which is a net contributor to the state’s coffers.
Market players identified the treatment of Mas’ comments as one of the reasons for a spike in Spain’s risk premium on Friday. The spread between the yield on the Spanish 10-year government bond and the German equivalent widened 17 basis points to 494 basis points.