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Spanish bailout looks unlikely

Spain’s Prime Minister Mariano Rajoy yesterday all but ruled out seeking a bailout in 2012 but vowed to do so if faced with persistent, high borrowing costs.

Rajoy has kept world markets on edge as he ponders whether the eurozone’s fourth biggest economy will seek a rescue, in which the European Central Bank would buy Spanish bonds to drive down Madrid’s finan-cing costs.

But the conservative prime minister gave the clearest sign yet that he sees no reason to trigger a bailout this year.

Spain has nearly completed the bond issues required to finance the Government’s operations throughout 2012, he said.

“For now we have covered practically the entirety of our issues through this year,” Rajoy said.

By October 23, Spain had raised a gross €85.9 billion in medium- and long-term bond sales – equal to 95.1 per cent of its 2012 target.

Spain’s total gross financing needs for this year amount to €186 billion, a goal that rises to €207 billion next year.

Spain may yet be forced to seek external assistance, Rajoy conceded. “If we see that during a long period Spain is financing itself at very high prices then we would have to ask for it,” he said.

But the crucial question, the Spanish leader said, would be whether any European Central Bank intervention significantly curbs the country’s borrowing costs.

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