The Spanish government has insisted that it will not follow its Portuguese neighbour in asking the EU for financial assistance, but many in the financial markets disagree. And it is not just public sector debt that has built up. This may add up to 62% of gross domestic product (GDP), but Spain's private sector debt-to-GDP ratio is a more worrying 170%.
According to data from the Bank of International Settlements (BIS), it is exposure to the private sector that may cause Spain's foreign creditors the biggest problem. BIS third-quarter 2010 data reveal that exposure to non-bank, private sector companies in Spain amounts to $405.3bn, versus public sector debt exposure of $123bn.
Germany is Spain's biggest creditor, with a total exposure of $242.3bn. However, France is not far behind, with a total exposure of $224.7bn. The US is owed $187.6bn, and the UK $152.5bn.
In terms of European peripheral economies, Germany is also the biggest creditor but by a larger margin, with a total exposure of $568.7bn, versus $440bn and $430bn for France and the UK, respectively. Interestingly, 68% of the US's exposure to peripheral eurozone economies (a total of almost $392bn) relates to ‘other exposures’, which include positive market values of derivatives contracts, guarantees extended and credit commitments.