BERLIN--German Finance Minister Wolfgang Schaeuble and Spanish Finance Minister Luis de Guindos will hold talks in Berlin on Tuesday, a German government spokeswoman said Monday, as Spanish borrowing costs rose to their highest level since the introduction of the euro currency.
"They will discuss the current situation in Spain," the spokeswoman said during a regular government press conference in Berlin, adding that the talks would not be about a broader bailout for Spain. "We believe that reforms already begun by Spain will help calm the markets."
The meeting comes as Spain comes under increasing pressure from financial markets. Interest rates on Spanish bonds have risen to more than 7% on secondary markets, a level that is considered unsustainable.
Spain's European partners have already agreed to provide up to 100 billion euros ($121 billion) in loans to Spain to refinance the country's banks, but speculation has that Madrid could seek additional aid in order to finance its indebted regions.
Many of Spain's municipal government's are running significant budget deficits and have been pressing the central government to help them secure funding. The regional government in Valencia requested financial aid Friday from the central government's newly-created bailout funds, and the region of Catalonia is also considering asking for aid, according to Spanish daily El Pais.
But the German and Spanish finance ministers aren't expected to discuss additional aid for Spain, the spokeswoman said. The government of Germany believes the regional strains that Spain is facing should be dealt with on a national level, and therefore are not relevant to this meeting, Germany or the European Union.
"When it comes to Spain and financial requests from the regions, there is a national fund, which was established to help those regions," she said, adding that this is a "national issue."
The central government launched the fund last week, and said it will lend out up to EUR18 billion to regions before the end of the year. In addition to Catalonia, Murcia is also considered another likely candidate to face financial trouble and ask for aid, according to Spanish newspaper reports again.
Spain's borrowing costs surged Monday with the yield on Spain's five-year benchmark bonds yielding 7.72% at 1501 GMT. In contrast, Germany sold 12-month treasury bills at an average yield of -0,0540% earlier Monday.
(Jessica Mead contributed reporting)
Write to Franziska Scheven at franziska.scheven@dowjones.com
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