Vladimír Urbánek (Kurzy.cz)
Markets  |  September 26, 2012 14:24:11

Rajoy will wait until the problems have also Italy, they will be better conditions for agreeing to help

According to Raphael Gallardo Rohschild of AM is likely that Spanish Prime Minister Mariano Rajoy postpones any request for financial assistance for his country deliberately. Waiting totitž to restore confidence in the markets will force the application for financial assistance is Italy, which also belongs to the problematic country monetary union. Italy is in Spain "next in line". If this really happened, it will be for all concerned to look a little better, though it will not be alone. Political leaders would not be under such a high pressure and negative publicity should not carry so much stigma of failure. Negotiations on a possible aid could in such a combination also bring more pressure to negotiate mínějších conditions compared to the assistance provided.
To prevent this scenario could occur Spain needs a reduction of the yield spread at his and Italian government bonds. He currently stands at around 65 basis points = 0.65%. To reduce the spread could occur in conjunction with other forthcoming auctions of government bonds, in which Spain is a little ahead when this year sold in markets already 83% of the planned volume of new bonds.

From the perspective of Italy would be at this point seems preferable, if Spain has requested assistance and thus created a first test case for the use of European rescue systems. If it would appear to be functioning, it would be a significant positive psychological effect. Restoring confidence in the strength of Europe should reduce the upward pressure on the cost of Italian debt management and overall it should help to soothe the European debt crisis.

Italy's public deficit last year reached 3.9% of GDP. Total debt of the country but peaked at 1.9 trillion USD = about 120% of GDP, which is the second worst, after Greece to failing.
Spanish public deficit last year reached a full 9% of GDP, but 735 mld.EUR debt is "only" 69% of GDP, the lowest of the 4 largest euro area economies.
The Italian economy in the 2Q of this year declined by 0.8% compared to 0.4% in the case of Spain.
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Rajoy bude vyčkávat až bude mít problémy také Itálie, pak budou lepší podmínky pro dojednání pomoci

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