Spain Becomes Fourth Bailed-Out Country In 17-Nation Euro Zone
Spanish officials appeared hesitant to recognize the reality of their country’s situation on Saturday as the nation agreed to accept as much as €100 billion ($125 billion) in a bailout of its cash-strapped financials sector by one or both of the euro zone’s rescue funds: the temporary European Financial Stability Facility or the permanent European Stability Mechanism.
“This is not a rescue,” Spain’s Economy Minister Luis de Guindos was quoted as saying by BBC News.
But, hey: If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.
The agreement that led to Spain becoming the fourth bailed-out country in the 17-nation euro area — joining Greece (with two rescues), Ireland, and Portugal — came after a 2-1/2-hour conference call drawing together all the finance ministers in the euro zone for emergency talks. Several sources described the discussion as heated, Reuters reported.
The now-familiar troika — the European Central Bank, the European Commission, and the International Monetary Fund — will soon send staff to Madrid to assess the requirements of the Spanish financials sector, a Eurogroup representative told BBC News.
Speaking of the bailout that is not a rescue, de Guindos said at a news conference on Saturday: “This is a loan which is given in very favorable conditions, which will be determined in the next few days. But they are very favorable — much more favorable than the market ones.”
De Guindos doubtlessly will be proven correct on this point. Spain’s 10-year bond yield was at 6.17 percent Friday, according to Bloomberg News. So the troika should be able to beat those kind of terms pretty easily.
Because of its economy’s size — the fourth-largest in the euro zone — Spain also appears likely to get a better deal than did Greece, Ireland, or Portugal. De Guindos noted the most onerous conditions attached to the loan(s) will apply not to the country but to the financial institutions getting the money.
Of course, one of these financial institutions is the recently nationalized Bankia SA, whose request for a bailout or a rescue or a duck worth €19 billion ($24 billion) on May 25 became the focal point for the financial crisis in Spain that has concentrated the minds of the euro-zone’s finance ministers so wonderfully this weekend.
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