The prospect has receded of Spain requesting a full bail-out in the coming weeks after Mariano Rajoy, the prime minister of Spain, said he would not ask for assistance if there was no evidence that the country's borrowing costs would go down as a result.
Rajoy's announcement will be welcomed privately by Germany, which has been urging Spain not to request help from the eurozone's rescue fund – the European Stability Mechanism (ESM) – or the European Central Bank (ECB).
However, it risks unsettling financial markets, because traders had become so certain that Spain would receive external support that they had priced this into their transactions.
“If we remain with the same borrowing costs [as we do now], then there is no sense [in asking for a bail-out],” Rajoy said in a radio interview on Tuesday (6 November).
Spain's bond yields – an indication of borrowing costs – have fallen in recent weeks, after reaching euro-era record highs earlier in the year.
Rajoy had previously hinted that he would apply for a precautionary credit line from the ESM and for bond-buying help from the ECB.