(ES) Spain Econ Min De Guindos: Confirms Spain will request EU aid for its bank recap plan; Formal aid request will be made June 21. Euro Zone leaders agreed to loan Spain up to €100B euros to support bank recapitalization at a rumored rate of 3.0%.
(EU) Follow Up: Europe ministers comment on Spain’s agreement to request aid for banks:
How to interpret these headlines?
Market is obviously optimistic over Spanish Bailout request as I have said time and again that uncertainty is often times worse than bad news. With Spain asking €125B in Bailout for its banking sectors, which is 3 times than the conservative IMF estimate (€40B), market is feeling a rare sense of confidence that it will be enough to recapitalize Spanish banking sectors with enough buffers… Although earlier reports out of JP Morgan puts the bailout estimate at €350B, while RBS estimated €450B, considering a Spanish bailout, not just banking sector aid.
I believe we’ll probably see consolidation of sorts from the risk appetite buying today, but the overall fundamental for the Euro has defintiely improved, at least for the time being, with no more uncertainty out of Spain… I believe we could see more EUR strength in the short-term, although the market focus will soon turn to the upcoming Greek election for direction… All in all, if we don’t get any more surprises from Spain and “Grexit“, EURUSD is likely to remain range-bound and perhaps slightly higher until the next FOMC Meeting…
And to answer the question, is Spanish Banking Aid same as a Spanish Bailout, the answer is “Yes”… News agencies are already calling Spain as the fourth EU member to request a bailout… so go figure 🙂
Spain Bank Aid – Not The Same As A Spanish Bailout?
June 11, 2012 by 7 Comments