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Spain to Inject Public Debt Instead of Cash to Bankia, Pais Says

Spain plans to inject public debt instead of cash directly into the Bankia Group to pay for the bank’s recapitalization and avoid having to go to market with the instruments, El Pais reported, without citing anyone.

Until now, to pay for bank bailouts, the state would sell debt in the market through its bank rescue fund, known as the FROB, and use the cash to aid banks. A jump in yields has made debt sales more difficult and expensive, El Pais said.

The government has been planning to use this strategy for weeks and the bailout of Bankia precipitated events, the newspaper added. A spokesman for the Economy Ministry wasn’t immediately available for comment.

To contact the reporter on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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