Spain defied the markets by averting a sovereign bailout this year but high interest rates could yet force Madrid to its knees as the nation confronts a 207-billion-euro ($274-billion) financing headache in 2013.
The eurozone's fourth-biggest economy has skirted a rescue so far even after slipping into a recession in mid-2011 that has sent the unemployment rate soaring to 25 percent, the highest in Spain's modern history.
Prime Minister Mariano Rajoy's government reached out in June for a eurozone rescue loan of up to 100 billion euros to fix the balance sheets of Spanish banks, crushed by bad loans since a 2008 property crash.
But even as investors fled Spain, sending its 10-year-bond yield above seven percent mid-year as they watched Madrid struggle to curb soaring public debt, Rajoy managed to swerve the politically costly option of pleading for international help.
European Central Bank chief Mario Draghi gave decisive support in September when he announced the bank's readiness to buy an unlimited sum of bonds to curb borrowing costs for member states that accept strict conditions.
The prospect of such intervention alone was enough to calm the selling of Spanish debt securities.
A grateful Rajoy says he can get by for now without even seeking the ECB's bond-buying intervention.
Spain's 10-year bond yields were trading below 5.3 percent in the past week.
In his final news conference of the year, the prime minister warned that Spain's economy faced a "very tough" year ahead.
"Today we are not thinking of asking the European Central Bank to intervene to buy bonds on the secondary market but that is a very useful instrument that is available to all countries of the Union," he added.
"If Spain and its government believe that it is necessary to use it, let there not be the least doubt that we will do so. But in principle today we are not thinking of doing it," the premier said Friday.
On page two... Analysts say that could change...