(Updates with comments from finance minister starting in second paragraph.)
June 27 (Bloomberg) -- Finance Minister Elena Salgado said Spain won’t need a bailout even as a surge in borrowing costs “worries” her, with the yield on the country’s benchmark 10- year bond at its highest level since 2000.
While demand for Spanish debt remains strong, “of course” the yield “worries me,” she said in an interview today on TVE television in Madrid. “We are not, nor will we be, on the verge of any bailout.”
Spain’s government, facing general elections in March that polls indicate it will lose to the opposition People’s Party, is trying to convince investors it can reorder its public finances and avoid following Greece, Ireland and Portugal into a bailout. Spain’s 10-year bond yield climbed to an 11-year high of 5.77 percent today as the cost of insuring against default on European sovereign debt rose to a record.
“Each time we ask for money, there are lots of people willing to lend us the money we need, many funds, many sovereign-wealth funds, many countries, many investors,” Salgado said.
Uncertainty over the Greek government’s ability to secure parliamentary support for its austerity program is pushing up Spanish borrowing costs, Salgado said, adding that she’s “not contemplating” the possibility of lawmakers rejecting the plan.
“For a day and a half, till the result of the vote on austerity measures is known in Greece, this uncertainty is going to be there in the markets,” she said.
The first session of a three-day debate in Greece on new budget cuts is scheduled to begin today. A vote is expected on June 29 on the plan, which European leaders have said is a prerequisite for further aid.
--With assistance from Emma Ross-Thomas in Madrid. Editors: Jennifer M. Freedman, Leon Mangasarian
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