Spains Toxic Debt Hits New High

The toxicity of Spanish debt has now
reached 9.42% of all lending, up from 8.96% in the previous month and the
highest since records began according to the Bank of Spain.

The bank said that 164.4 billion Euros worth of loans are now
more than 3 months past their payment deadlines. Household and corporate
deposits also fell by over 6.5% on the previous year according to the report.

Spain has already agreed a 100 billion Euro bail-out for its
beleaguered banks. Now the markets are pressing it to ask for a full scale
international rescue. Prime Minister Rajoy is steadfast in his silence about
whether Spain will do so, simply saying that any decision will be made for the
good of Spaniards,

Not everyone in his government is so tight-lipped however.
Last week Ana Botella, Mayor of Madrid and wife of former Prime Minister Jose
Maria Aznar said “it seems inevitable” that Spain will ask for a full bail-out.

“There’s no doubt about it. It’s very probable that
we’re going to have to ask for help from the European Union.”, Botella
told Spanish news agency Europa Press in an interview.

Meanwhile the Spanish press has quoted unnamed sources
suggesting that the country may ask EU authorities to use leftover funds from
its €100bn bank bail-out to buy sovereign debt.

Apparently the sources told El Confidencial that EFSF bond buying would “maximise the
efficiency of financial assistance”.

The yield on Spain’s benchmark 10-year bond fell by 10 basis
points on Friday morning, to 6.38pc. Last month, Spanish borrowing costs hit a
record high of 7.75pc.

Spain’s elevated borrowing costs means lenders become
increasingly reliant on the European Central Bank for funding. Data this week
showed that total Spanish bank borrowing from the ECB climbed 11.5pc in July to
€376bn compared with €337bn in June.

Source: Article written by Liam Bailey behalf
of Bank Repossession Spain, specialising
in repossessed
property for sale in Spain.