Spain will request a sovereign rescue within a year, while Italy will avoid that fate, as the euro-area’s debt crisis looks set to enter a fourth year, ccording to the Bloomberg Global Poll.
Almost three years since Greece revised its deficit numbers, triggering financial market turmoil across Europe, 85 percent of 847 investors, analysts and traders who are Bloomberg subscribers said Spain will seek aid in the next 12 months. Fifty-nine percent said Italy will skirt a rescue over the same timeframe.
While Draghi says only countries who agree to the austerity and monitoring demands of Europe’s rescue fund will get ECB support, Rajoy is holding off on a request until the ECB president lays out conditions for the ECB’s involvement. He meets German Chancellor Angela Merkel today in Madrid just as Draghi speaks to reporters in Frankfurt following a meeting of the ECB’s Governing Council.
The divergent opinions on Spain and Italy are also reflected in the widening spread between the countries’ bond yields. Investors demand 89 basis points more to hold Spanish 10-year bonds than similar maturity Italian debt. At the start of the year, Italy yielded 180 basis points more than Spain.
With 2012 drawing to a close, 32 percent said one or more countries will leave the euro area by January, the first time this year a majority hadn’t anticipated an exit. Fifty-seven percent forecast a departure this year as recently as May.