Spain on course for €300 billion bailout

Spain's prime minister Mariano Rajoy said on Thursday that his country was on course for a €300 billion bailout and that he was ready to act "in the best interests of the Spanish people".

Rajoy, who has not yet been able to convince dubious markets that he can bring Spain's deficit back under control, has already asked for €100 billion from Europe's bailout funds for its debt-laden banking system. He came near to seeking a full-blown rescue yesterday even as he said Madrid would have to carefully examine the conditions of such a bailout.

His comments follow European Central Bank president Mario Draghi belying investors' hopes of delivering immediate aid to turbulent debt markets that have pushed Spain's cost of borrowing to unsustainably high levels.

According to Draghi, the central bank was considering buying up the debt of euro zone strugglers and, importantly, he also stressed that nations themselves would have to formally request a bailout from the European Financial Stability Facility. This is expected to come with harsh financial conditions and austerity measures.

Rajoy said he wanted more elaboration on the "non-standard measures" the ECB was planning – likely to be bond market intervention – before deciding on his next step. Meanwhile, Spain's benchmark borrowing costs fell under the 7 per cent danger mark yesterday, although, at 6.77 per cent, they still were a cause for worry.

He said he would do, as he always did, what he believed to be in the best interest of the Spanish people, adding that what he wanted to know was what these measures were, what they meant and whether they were appropriate and, in light of the circumstances, a decision would be made, but he had still not taken any decision.