FXStreet (Barcelona) – Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views that a deadline for the Greece debt deal might be near as the negotiations with creditors have shifted to a ‘take it or leave it’ form, and further comments on the Grexit risks.
Key Quotes
“The shift away from negotiations to a ‘take it or leave it’ stance by Greece’s creditors means we are getting ever closer to some form of deadline with an outcome. Syriza is now under the gaze and will have to take the next step. Might it be an announcement to hold a referendum on what the EU/ECB/IMF have offered? PM Tsipras did mention the idea of a referendum in May and if the ‘take it or leave it’ offer contains the very aspects Syriza promised to eschew, a return to the electorate may be the only political solution.”
“A referendum would no doubt create volatility but with over 70% of the electorate in favour of staying in the single currency, a successful outcome would be probable. Still time is fast running out for that scenario with the ECB payment of EUR 3.5bn due on 20th July. Certainly something dramatic looks to be now required to pull this back on track – the departure of the IMF from the negotiations due to no progress being made recently is a concern given the insistence of the EU/ECB in having the IMF signed up to any deal.”
“Despite the ongoing saga and lack of progress, we maintain that exit risk is not priced in any notable way in financial markets outside of Greece.”
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