By Simon Miller
Spain has had its bailout package agreed by the eurogroup as its ten-year yield hovers around the dangerous seven per cent mark.
Spanish ten-year debt has hit 7.276 as of 15.22BST, past the seven per cent threshold which is considered dangerous for nation states as it starts to just service the interest on debt.
Eurozone ministers unanimously agreed to the bailout which will see up to €100bn (£78.3bn) in loans, which will have a maximum maturing of 15 years with an average of 12.5 years, to recapitalise Spanish banks
In a statement, the eurogroup commented: "Ministers concur with the assessment of the Commission, in liaison with the European Central Bank, the European Banking Authority and the International Monetary Fund (IMF), that providing a loan to Spain for the purpose of the recapitalisation of financial institutions is warranted to safeguard financial stability in the euro area as a whole."
Spain's Fund for Orderly Bank Restructuring will act as agent of the Spanish government to receive the funds and channel them to the financial institutions concerned.
The statement continued: "The Spanish government will retain the full responsibility of the financial assistance. The financial assistance will be accompanied by policy conditionality focusing on the financial sector. This conditionality consists of bank-specific measures, including in-depth bank restructuring plans in line with EU State aid rules and sector-wide structural reforms that embrace segregation of bank's problematic assets, and the governance, regulation and supervision of the banking sector."
Olli Rehn, the EU's economic and monetary affairs commissioner, commented: "The aim of this programme is very clear: to provide Spain with healthy, effectively regulated and rigorously supervised banks, capable of nurturing sustainable economic growth."
Christine Lagarde, managing director of the IMF, said: "We welcome the decision made today by the Eurogroup to grant financial assistance from the European Financial Stability Fund (EFSF) to Spain to recapitalise its banking sector. The recapitalisation of weak banks and the other reforms attached to the agreement are consistent with the IMF's recommendations in the recent Financial Sector Stability Assessment (FSSA) and Concluding Statement of the Article IV Consultation mission."