FXstreet.com (Córdoba) - A Spanish newspaper reported today that a formal request for EFSF aid for domestic banks can come as early as this week. According to Marc Chandler, analyst at BBH, "this would be seen to clear the way for the payment of the first tranche of the 100 bln euro bank aid package that had been previously earmarked. That in turn could help meet the conditionality outlined by Draghi that would allow the ECB to buy Spanish bonds".

However, the analyst notes that Rajoy himself continues to keep his card close to his vest. "After meeting with the King earlier, Rajoy said that his decision still depends on knowing how the mechanism will work and the new conditions associated with ECB bond purchases".

"Rajoy's comments themselves support the idea that the two decisions--EFSF funds for Spanish banks and bond purchases", says Chandler. "Rajoy explains that he sought funds for the recapitalization of Spanish banks "because it seemed reasonable"..."and now, if it seems reasonable, we will do the same" [request EFSF bond purchases]. "As is logical, until we know what we are talking about [conditions], we will aren't going to take any decisions."

"If truth be told those conditions do not appear to have been decided yet. Draghi has hinted that the mechanism will be developed in ECB committees. Our conclusion then is that Rajoy is most likely continuing to flirt", BBH analyst concludes.