Spain gets E100bn from EFSF/ESM

The FT reports that Spain will get E100bn from official Euro funds. It will count toward their national debt, but is on more favourable terms than the Spanish Sovereign could presently issue.

It is not yet clear if it is EFSF money (which is not senior to current bondholders) or ESM money (which is super-senior like IMF money).

The catalyst appears to have been this IMF Financial Stability Assessment – which found that Spanish financial institutions need more capital.

At the headline level, this is a good development – as at root, the European problem cannot be solved until European banks have been properly re-capped.

I hope that the decision to get this done early – before Madrid’s Auditors have reported – reflects a prudent desire to insure against the risk of a bad outcome in next weekend’s Greek elections.

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