09 SEP 2010
By Brian Parkin and Rainer Buergin | Bloomberg
Portugal, Spain and Ireland, all of which saw their bond-yield spreads over Germany rise this week, probably won’t need support from the euro-region rescue fund, a senior lawmaker from Chancellor Angela Merkel’s party said.
The Luxembourg-based 440 billion-euro ($558 billion) European Financial Stability Facility, headed by former European Commission official Klaus Regling, was set up in May as the Greek debt crisis threatened to spill over to other euro states.
“I see -- and Mr. Regling stressed that as well in the past days -- that the stabilization fund is probably not going to be used,” Leo Dautzenberg, parliamentary Finance Committee spokesman for Merkel’s Christian Democratic Union, said today in an interview.
Irish and Portuguese government bonds fell yesterday, pushing the yields on 10-year securities to records versus benchmark German bunds. In a speech in Riga the same day, Merkel said that debt-laden governments must stick to their deficit- cutting programs because Germany won’t agree to have the euro fund turned into a permanent facility to provide aid.