Brussels rules out Spanish petition for aid this weekend

European sources note market conditions have improved

A high-ranking euro-zone official on Friday ruled out an imminent request from Spain for assistance from the European rescue funds.

“There will be no petition by Spain [this weekend] and I am sure that this will not take place in an imminent fashion,” said the official, who has knowledge of the preparations for the European finance ministers meeting on Monday.

There have been a number of reports this week that Spain would tap the European Financial Stability Facility (EFSF) or its permanent successor, the European Stability Mechanism (ESM).

“If you look at current situation in the market, I don´t see any need for Spain to ask for any kind of program,” a high-ranking Eurogroup official said.

At the Spanish Treasury’s debt auction on Thursday the yield on the three-year bond rose slightly, while those of the two- and five-year issues Thursday fell significantly. “If you look at the results of the last auctions, yesterday’s [Thursday’s] was very, very good,” the official said. “The situation in the markets is far being what had us concerned half a year ago.”

The secretary of state for the economy, Fernando Jiménez Latorre, on Friday acknowledged the government was in talks with the European Union on a second bailout on top of the one to recapitalize the country’s banks, but added the administration is also “studying alternatives” in order to take a decision that “most benefits” the Spanish economy.

Reuters reported Thursday European officials are studying the idea of guaranteeing against losses on Spanish bonds rather than having the ESM or the EFSF buy them in the primary market.


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