Zapatero Says Agreement Should Help Ease Spain’s Financing Costs
Spanish Prime Minister Jose Luis Rodriguez Zapatero said that the agreement between euro-area leaders should help ease his nation’s financing costs as it fights contagion from the debt crisis afflicting the region.
“The response given today by the euro zone leaders’ summit should generate confidence and stability in the markets,” Zapatero told reporters late yesterday after a summit in Brussels. “It should help reduce the excessive percentage which was requested of some countries to finance themselves and bring it back to more normal levels, hence facilitating the fulfillment of the commitments we still have ahead.”
Before the summit, Spain opposed moves led by Germany to get investors to share the burden of any further bailout of Greece because it might stoke doubts about other countries’ abilities to pay back debt. Zapatero’s minority Socialist government is battling to convince investors Spain can stem the euro area’s third-largest deficit and avoid following Greece, Ireland and Portugal in seeking an international rescue.
“This was a decisive summit,” Zapatero said. “We reached a good, strong, concrete and precise accord, which will transmit confidence and credibility.”
Spanish, Greek and Italian 10-year bonds jumped late yesterday as details of the summit agreement emerged. Spanish 10-year bonds rose for a third day, lowering yields 25 basis points to 5.73 percent as of 4:59 p.m. in London. That reduced the spread, or yield difference, over benchmark German bunds to 285 basis points.
Zapatero said that Spain doesn’t need any European help for its banks. He said that the region has given itself “strong weapons” to solve problems and that the terms of the agreement on the participation of banks in the Greek bailout “are clear, precise and convincing, as I had requested it.”
While the element of private sector participation is relevant, the summit’s most notable achievement is that it has strengthened European capacity to act, he said.
Zapatero said that the summit has shown Europe’s ability to provide adequate responses to individual countries’ problems, even as he agreed with French President Nicolas Sarkozy that the region’s governance needs to be improved. Direct European intervention to buy bonds on the second market was still totally out of the question till recently, he said.
To contact the reporter on this story: Angeline Benoit in Madrid at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com
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