Back in late March, we pointed out - much to the chagrin of the LTRO-funded Spanish-sovereign-debt-stuffing banks of the tapas-nation - that, in a similarly misleading manner to Greece's 'leverage' the debt-to-GDP data for Spain was significantly higher than official estimates. Once sovereign guarantees, contingent liabilities and their responsibilities to the EU and the ECB were included things got a whole lot uglier. Now, slowly but surely, as reported by Reuters this evening, some of these bilateral guarantees/loans are coming to light. Instead of the expected EUR8 billion of 'regional refinancing' expected for 2012, it turns out there is EUR36 billion and as Reuters notes "the difference is due to bilateral loans from Spanish banks to the regions worth 28 billion euros that were not made public previously" adding that "It could unnerve further investors concerned by the capacity of Spain to curb its public finances and reform its banking sector." Critically this stunning 'discovery' should be worrisome since the plan, given the regions are virtually blocked from public market financing - due to the high cost of funds, was/is for the sovereign to guarantee (there's that word again) their issuance explicitly. Ironically, as de Guindos and Hollande are chummy borrow-and-spendaholic growth-seekers versus Merkel's safe-and-austere determination, so now the Spanish authorities must lend exuberantly to their regions while at the same time demanding deficit targets are met (or else?) - or as one Reuters' source objects: "You can't tell them on one side that they have to be austere and on the other side give them unlimited liquidity". Irony indeed.