EC 'not worried' about pressure on Spain’s credit spread

Date: Tuesday 29 May 2012

The European Commission is reacting to the seemingly inexorable rise in Spain's credit spread with a certain amount of sang froid.

When asked about the rise in Spain’s credit spread on Monday as it hit a record 511 basis points, spokesman for European Commission’s Economic and Monetary Affairs Amadeu Altafaj told news agency Efe that “we’re not worried about that”.

After last week’s €19bn bailout of the financial institution Bankia, the market has been putting the pressure on Spain to take action and speculation runs rampant that the country could request assistance from the European Financial Stability Facility. However, Spanish Prime Minister Mariano Rajoy has already said that they have no need of a bailout and stated that Spain’s banking system does not need a rescue.

Deputy Trade Minister Jaime García Legaz repeated this idea on Tuesday morning in an interview on BloombergTV. “There is no need for external funds to recapitalise our banks. We can do it on our own,” he said.

When questioned about the possibility of the European Central Bank (ECB) stepping in to give liquidity to Spain, Altafaj avoided the question saying only that “the ECB has shown that it is willing to play a major part to contribute to the fight against the crisis and has already had an important role in supporting countries under pressure such as Italy or Spain.”

Lastly, Altafaj pointed out that Economic and Monetary Affairs Commissioner Olli Rehn would make a statement on Bankia’s bailout tomorrow.

JM

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