LONDON, June 11 (IFR) - Spain is expected to remain a
guarantor of the European Financial Stability Facility after it
receives a proposed credit line to recapitalise its banking
sector, a source familiar with discussions at the EFSF said.
Ireland, Portugal and Greece all stepped down as a
guarantors of the eurozone rescue fund after they were bailed
A different approach is being discussed for Spain's banking
sector recapitalisation, although initials thoughts are that the
funding will be routed through the sovereign to the Fund for
Orderly Bank Restructuring (FROB), which would increase Spain's
Banking sources on Monday morning told IFR that Spain was
expected to drop out as an EFSF guarantor after a formal request
for funding is made, expected to happen by the next Eurogroup
meeting on June 21.
EFSF is still considering request for proposals submitted by
banks for an upcoming euro benchmark, expected to come to market
One senior banker said that having Spain as a guarantor
would directly affect investor perception of EFSF's absolute
credit risk and potentially hamper future issuance.
(Reporting By John Geddie)