THE EUROZONE edged closer to its proposed solution to the debt crisis yesterday, as Spain revealed that it had formally requested a banking bailout and Greece’s debt buyback plan impressed its foreign lenders.
Spanish economy minister Luis de Guindos revealed that the state has asked for €37bn (£30bn) from the European Stability Mechanism (ESM) as a means of easing pressure on its troubled economy from a banking and housing crisis.
The move had been agreed in principle over the summer. Spain is yet to request an official sovereign bailout, despite the move being widely expected among analysts.
The ESM funds come “with a 12.5 year maturity with a grace period of 10 years and an interest rate clearly below one per cent and, at least in the first year, will be just above 0.5 per cent,” De Guindos said.
“We believe these are advantageous conditions, that will help heal, restructure and overcome the problems in the Spanish banking system. It’s positive, it’s fundamental, it’s vital and we won’t make the mistakes of the past.”
The minister explained that the funds will arrive at Spain’s so-called “bad bank” from around 12 December. Spanish lenders that have not been nationalised can apply for some of the funds.
Meanwhile Greece said it would spend €10bn to buy back bonds at a price range that topped market expectations, boosting hopes it can cut its ballooning debt and unlock long-delayed aid.
A successful buyback is central to the efforts of Greece’s foreign lenders to put the near-bankrupt country’s debt back on a sustainable footing and would clear the way for the funding Athens needs to avoid running out of cash.