Spain Bank Rescue Glee Morphs Into Markets Rout

He added that with the bailout, Spain's debt-to-gross domestic product ratio ⿿ which was a relatively low 68.5 percent at the end of last year ⿿ could shoot up to the 90s next year. And bond yields will remain high.

If the ratio gets up to Greek levels of 120 percent or so, and 10-year yields close in on the near-7-percent levels Spain hit several weeks ago "then people will ask that question about a second bailout" for Spain, Miller said.

Another issue is whether the European money comes with strings attached for the government, and not just an obligation for banks to restructure. When the bailout was announced on Saturday, Spanish Economy Minister Luis de Guindos said the rescue would not force any new austerity measures on a government that has already issued a wave of painful measures since taking power in December.

Speaking to reporters Sunday, Prime Minister Mariano Rajoy avoided using the term 'bailout' to describe the aid, calling it instead a credit line without the strict austerity conditions that have accompanied bailouts for Greece, Portugal and Ireland.

However, the European Union made clear Monday the money is more than just a loan. Besides being paid back with interest, there will be conditions for the Spanish government.

"When people lend money, they never do it for free. They want to know what is done with the money," said Joaquin Almunia, the European Competition Commissioner.

"I am not talking about just the obligation to pay back the money, but also some other kind of terms," he told Cadena Ser radio, adding that these remain to be determined.

Spain's economy ministry released a statement later saying the package includes "the necessary conditionality for the financial sector" but requires no new fiscal consolidation or structural reforms beyond those the government has already embarked on.

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