Spanish borrowing might end up with zero interest to pay

WHAT might have appeared earlier this year as panic borrowing by Spain as it looked to the European Central Bank (ECB) to help bail it out as the country veered into lockdown may actually turn out to be a blessing in disguise.

The ECB has already confirmed that it will effectively underwrite all of the Spanish bonds to be issued and because of the spiralling fall in interest rates, the Spanish Government may well find that the borrowing costs next to nothing.

In the long term it will have to repay the principal but possibly without interest.

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