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Spanish PM considers bailout options
Spain's implied cost of borrowing fell below 7% on Friday as Prime Minister Mariano Rajoy said he was considering bailout options.
4 August 2012, 12:00am
This is the closest Mariano Rajoy has come to admitting he is considering a bailout after months of denials.
Speaking to reporters on Friday, Rajoy urged Europe's leaders and the ECB to speed up the introduction of key reforms to fight the debt crisis and strengthen the struggling banking sector.
"I haven't made a decision [on a bailout] yet,'' Rajoy said after a cabinet meeting. "I want to know what the unconventional measures proposed by the ECB are. We do not know what is being proposed."
"I will do what I always do, act in the best interest of Spaniards," he said after calling for a crisis meeting of the region's finance chiefs.
Rajoy's comments came a day after the ECB warned it would only help lower a country's borrowing costs if that country's government applied for rescue aid from the rescue funds set up by the 17 countries that use the euro.
Spain borrowing costs have risen sharply for all bond types in recent months as the uncertainty over whether the country can afford to contain the problems in its banking sector and indebted regional governments has continued unabated.
The interest rate, or yield, on Spain's benchmark 10-year bond was at 6.82 per cent just after Rajoy spoke - close to the seven per cent level, which many market-watchers consider unsustainable in the long term.
Such rates could likely push Spain to seek a bailout, deepening Europe's financial woes and sending repercussions to economies beyond the continent.
Greece, Portugal and Ireland all had to seek international bailouts when their borrowing costs stayed above 7%.
In June, Spain requested 100bn euros of loans from the EFSF bailout fund to help support its banks, which are struggling with bad debts from loans made in the property sector.
However, speculation had increased in recent weeks that the government would have to request a full financial rescue.