Spain is negotiating with euro zone partners over conditions for aid to bring down its borrowing costs, though the country has not made a final decision to request a bailout, three sources with knowledge of the matter said on Thursday.
The favoured option being discussed is that the existing European rescue fund, the EFSF, would purchase Spanish debt at primary auctions while the European Central Bank would intervene in the secondary market to lower yields.
No specific figure for aid has been discussed in the talks, which started several weeks ago, one of the sources told Reuters.
Other senior euro zone sources were more cautious, one saying nothing clear-cut had emerged on aid for Spain, while a fifth said no talks were going on at all.Spain's prime minister's office declined to comment on the issue.
A spokeswoman for the economy ministry said there was no change in the Spanish position, which is that it would wait until the next meeting of the governing council of the European Central Bank on Sept. 6, hoping for details on how the ECB plans to intervene, before deciding on any move.
Earlier this month Prime Minister Mariano Rajoy inched closer to asking for an EU bailout for his country, but said he needed first to know what conditions would be attached and what form the rescue would take.
ECB President Mario Draghi has said the central bank could intervene to lower painfully high yields but only if the country concerned asked for similar help from the bloc's rescue fund first.
Spain is the latest hot spot in the 2-1/2-year euro zone debt crisis after its ailing banking sector, which sought a 100-billion-euro European lifeline in June, and its highly indebted regions unnerved international investors earlier this year.
Last month, the country's borrowing costs reached their highest level since the launch of the euro single currency 13 years ago.
The risk premium investors demand to hold Spanish 10-year paper rather than German benchmark rose on Thursday to 504 basis points, a level seen as unsustainable indefinitely.
"Negotiations have started and are well under way. Right now the preferred option, the one that is being actively discussed, is for the EFSF to buy bonds on the primary market and for the ECB to buy bonds on the secondary," one of the sources told Reuters on condition of anonymity.
The source said no formal announcement would be made before Sept. 12 at the earliest, but things could move quickly after that.
The German constitutional court is due to rule on the European Stability Mechanism - the permanent European rescue fund - on Sept. 12, before which Germany cannot ratify it.
indiatimes.com
The favoured option being discussed is that the existing European rescue fund, the EFSF, would purchase Spanish debt at primary auctions while the European Central Bank would intervene in the secondary market to lower yields.
No specific figure for aid has been discussed in the talks, which started several weeks ago, one of the sources told Reuters.
Other senior euro zone sources were more cautious, one saying nothing clear-cut had emerged on aid for Spain, while a fifth said no talks were going on at all.Spain's prime minister's office declined to comment on the issue.
A spokeswoman for the economy ministry said there was no change in the Spanish position, which is that it would wait until the next meeting of the governing council of the European Central Bank on Sept. 6, hoping for details on how the ECB plans to intervene, before deciding on any move.
Earlier this month Prime Minister Mariano Rajoy inched closer to asking for an EU bailout for his country, but said he needed first to know what conditions would be attached and what form the rescue would take.
ECB President Mario Draghi has said the central bank could intervene to lower painfully high yields but only if the country concerned asked for similar help from the bloc's rescue fund first.
Spain is the latest hot spot in the 2-1/2-year euro zone debt crisis after its ailing banking sector, which sought a 100-billion-euro European lifeline in June, and its highly indebted regions unnerved international investors earlier this year.
Last month, the country's borrowing costs reached their highest level since the launch of the euro single currency 13 years ago.
The risk premium investors demand to hold Spanish 10-year paper rather than German benchmark rose on Thursday to 504 basis points, a level seen as unsustainable indefinitely.
"Negotiations have started and are well under way. Right now the preferred option, the one that is being actively discussed, is for the EFSF to buy bonds on the primary market and for the ECB to buy bonds on the secondary," one of the sources told Reuters on condition of anonymity.
The source said no formal announcement would be made before Sept. 12 at the earliest, but things could move quickly after that.
The German constitutional court is due to rule on the European Stability Mechanism - the permanent European rescue fund - on Sept. 12, before which Germany cannot ratify it.
indiatimes.com
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