MADRID (AP) -- Spanish stocks shot up Monday while its borrowing costs fell sharply as investors appeared relieved that Spain has secured a bailout for its banks.
In line with healthy rises in stock exchanges across Europe, the Ibex-35 stock index was up 4 percent about 90 minutes after the opening bell. Bank stocks rose strongly.
The interest rate on Spanish 10-year bonds -- an indicator of investor confidence of how well Spain can maintain its debts -- down as much as 8 basis points to about 6.1 percent.
Eurozone finance ministers said Saturday they would make up to $125 billion in loans available to the Spanish government to prop up banks laden with non-performing loans and other toxic assets after the collapse of a real estate bubble. Spain has yet to say how much of this money it will tap.
When the bailout was announced on Saturday, Spanish Economy Minister Luis de Guindos said the rescue would not force any new austerity measures on the Spanish government, already struggling to chip away at a bloated deficit in the face of a recession and nearly 25 percent unemployment.
And speaking to reporters Sunday, Prime Minister Mariano Rajoy avoided using the term 'bailout' to describe the aid, calling it instead a credit line without the strict austerity conditions that have accompanied bailouts for Greece, Portugal and Ireland.
However, on Monday the EU made clear the money is more than just a loan. Besides being paid back with interest, there will be strings attached for the Spanish government.
"When people lend money, they never do it for free. They want to know what is done with the money," said Joaquin Almunia, the European Competition Commissioner.
"I am not talking about the just the obligation to pay back the money, but also some other kind of terms," he told Cadena Ser radio, adding that these remain to be determined.
The loan will be supervised by the European Commission, the European Central Bank and the IMF, Almunia said.
A European Commission spokesman, Amadeu Altafaj, told Spanish state television that this troika will have people on the ground overseeing the restructuring of the Spanish financial sector.
He noted that last month the European Commission recommended Spain undertake further reforms such as speeding up the phasing of a higher retirement age -- it is to go from 65 to 67 -- and raise VAT sales tax. The newspaper El Pais quoted EU officials Monday as saying these changes and others are part of the conditions that come with the bank rescue package.
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