Bloomberg News

Spain Can Finance Itself, Even If Expensive, Fekter Says

May 02, 2012

Spain can finance itself on the capital markets even though its interest rates are high, Austrian Finance Minister Maria Fekter said.

“We are watching it very closely, in terms of the financial capacity,” Fekter told reporters before a meeting of European Union finance chiefs in Brussels today. “Spain can still get money on the capital markets, even if it’s expensive.”

Spain’s 10-year borrowing costs have jumped 1 percentage point to 5.85 percent since the government said in early March that it wouldn’t meet its 2012 budget deficit target, set by the European Commission, as the economy sinks into its second recession since 2009.

Prime Minister Mariano Rajoy’s People’s Party government, in power since December, has tightened rules to force lenders to recognize deeper real-estate losses, in a bid to convince the bond market that bank losses won’t overburden public finances.

“Spanish banks are above even the strictest Basel III ratios concerning the levels and the quality of capital,” Economy Minister Luis de Guindos said in Brussels today. “Spanish banks are among the least indebted, guaranteeing their solvency and capacity to withstand the crisis.”

De Guindos said on April 30 that he expected more bank mergers and efforts to clean up balance sheets. He reiterated that Spain won’t seek a European bailout for its lenders.

“Spain has very responsible government which is determined to do everything that is necessary to maintain Spain’s fiscal stability,” Polish Finance Minister Jacek Rostowski said today.

To contact the reporter on this story: Angeline Benoit in Brussels at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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