Spain will request a sovereign rescue within a year, while Italywill avoid that fate, as the euro-area's debt crisis looks set toenter 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 of847 investors, analysts and traders who are Bloomberg subscriberssaid Spain will seek aid in the next 12 months. Fifty-nine percentsaid Italy will skirt a rescue over the same timeframe.

Predictions of a bailout for the euro-area's fourth-largesteconomy leave European Central Bank President Mario Draghi underinvestor pressure to today flesh-out his plan to tame borrowingcosts by buying bonds. In a sign his July vow to do “whatever ittakes” to defend the euro is working, the poll signaled growingoptimism the 17-nation euro area would stay intact through the restof this year.

“The need of Spain to tap the fund is significantly larger thanItaly,” said Ulrich Leuchtmann, head of currency strategy atCommerzbank AG in Frankfurt and a poll participant. “Spain ismissing its budget targets by a much wider degree.”

The victim of a bursting real estate bubble, Spain's economy isin its second recession since 2009 and the unemployment rate is ata European record 25 percent. Fiscal weakness in some regions andslumping tax revenue will leave the government's budget shortfallthis year at more than twice the European Union limit of 3 percentof economic output.

Forty-seven percent of those surveyed said the country willdefault on its debt, the same amount as in May. Its 10-year debtnow yields almost 7 percent, the level that led to bailouts inGreece, Portugal and Ireland.

Prime Minister Mariano Rajoy is already negotiating as much as100 billion euros ($130 billion) for the nation's ailing banks, andhe's said he would consider asking for EU and ECB bond buying ifit's in the best interest of Spaniards.

Spanish two-year notes declined for a second day today after theTreasury sold 3.5 billion euros of securities maturing in 2014,2015 and 2016 in a test of market sentiment. Rajoy may decide toseek aid in the coming weeks to bring down financing costs as theTreasury faces 20 billion euros of bond redemptions at the end ofnext month.

Draghi's Plan

While Draghi says only countries who agree to the austerity andmonitoring demands of Europe's rescue fund will get ECB support,Rajoy is holding off on a request until the ECB president lays outconditions for the ECB's involvement. He meets German ChancellorAngela Merkel today in Madrid just as Draghi speaks to reporters inFrankfurt following a meeting of the ECB's Governing Council.

Draghi will announce that the ECB will make unlimited purchasesof debt of as much as three years, without setting a specific capon desired yield levels, two central bank officials briefed on theplan said yesterday.

“Draghi's announcement of intervention shows the robust will ofthe ECB to solve the problem,” Rajoy told three European newspaperslast week. “I will await the results of the ECB and then make adecision that's good for Spain and for the euro.”

Italy, where the budget deficit was forecast by the EuropeanCommission in May to run only about 2 percent of GDP this yearcompared to Spain's 6.4 percent shortfall, is better placed,according to those surveyed. Just a quarter see the euro area'sthird-biggest economy defaulting, about the same as in previouspolls.

Prime Minister Mario Monti, who raised taxes and cut spending toimprove Italy's finances, has shifted his focus to stimulating thestagnant economy, which has lagged the euro- region in terms ofgrowth for more than a decade. He said in an interview with Il Sole24 Ore published Aug. 29 that his government's austerity measuresare starting to offset market concerns and the country doesn't needto tap European rescue funds at the moment.

“The adjustment Italy's government has done will prove moreeffective than what the Spanish government is doing,” said TatuPaasimaa, a portfolio manager at Nordea Investment Management inHelsinki who replied to the survey. “Spain will need a bailout inthe next six months, but I can't see Italy needing one at themoment.”

Risk Premium

The divergent opinions on Spain and Italy are also reflected inthe widening spread between the countries' bond yields. Investorsdemand 89 basis points more to hold Spanish 10-year bonds thansimilar maturity Italian debt. At the start of the year, Italyyielded 180 basis points more than Spain.

Fifty percent of respondents said Portugal will go bankrupt, thesmallest response since January 2011, and 21 percent said the sameof Ireland, the lowest since June 2010.

By contrast, 92 percent anticipate Greece will default and 56percent say the country will have left the single currency by theend of next year. Sixty-nine percent Greece will be outside theeuro by the end of 2014.

Ninety-eight percent said Germany will keep paying its bills and89 percent anticipate France to do so. Outside the euro-area, 96percent said it is unlikely the U.K. will default and 95 percentsaid the same of the U.S.

Even as the crisis boils away, there were some signs of greaterconfidence in the outlook, with 27 percent saying the worst of theturmoil is over, a 10 percentage point jump since May. Sixty ninepercent still said any evidence of stabilization is temporary, downfrom 80 percent in May.

Exiting Euro

With 2012 drawing to a close, 32 percent said one or morecountries will leave the euro area by January, the first time thisyear a majority hadn't anticipated an exit. Fifty-seven percentforecast a departure this year as recently as May.

Only 6 percent predict the collapse of the euro zone this yearand the number anticipating a meltdown in the region's bankingsector retreated to 16 percent from 53 percent a year ago. Onlyabout a 10th said the euro area's pain will prompt a collapse inthe global economy.

Seventy-nine percent said the euro zone economy isdeteriorating, down from 84 percent in May. Most respondents stillworry economic trouble in Europe will fan social instability suchas riots this year although the number declined to 56 percent from84 percent in May.

The survey was conducted by West Des Moines, Iowa-based Selzer& Co. and had a margin of error of plus or minus 3.4 percentagepoints.

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