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Commentary

4 Things to Watch for in Spain

Spain is unlikely to face a Greeklike implosion in the near term, but things could continue to get worse for the country.

Once again, the flood of mostly decent earnings this week was mostly overshadowed by happenings in Europe. The sovereign debt crisis that had been on the back burner for a few months has began to bubble again as investors began fretting that Spain is lurching toward more trouble and would need to be bailed out like Greece, Portugal, and Ireland before it.

So is it time to start the bailout negotiations? Not quite yet. Europe is much farther from the brink then it was just a few months ago. The latest Greek bailout has mainly done its job; it has bought some valuable time. And the news this week was far from catastrophic. Although Spain's borrowing costs rose, the country was able to successful auction off a fairly large chunk of bonds, and demand for the auction wasn't anemic. In short, there is still private-investor appetite for Spanish bonds. Spain (unlike Greece) still has the liquidity to keep making payments and rolling over debt as long as rates don't explode.