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9 Dec 2014
Greek Political Instability creating fear - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that recent developments in Greece are worrisome to investors.
Key Quotes:
“Many fear that the political challenges in Greece could lead to its ultimate exit from the monetary union and default”.
“This concern has led dramatic loss in Greek bonds and stocks. Today's decline in Greek stocks (10.2%) is the largest since 1987. The 70 bp rise in the benchmark 10-year yield is among the largest of the year”.
“There have been a sequence of three issues that have forced the issue to the fore. First, over the weekend, the Greek Parliament approved the 2015 budget by 155-134 votes”.
“Second, the eurozone finance ministers blocked efforts by Greek Prime Minister Samaras to exit the assistance program”.
“These two developments set the backdrop for the third. Samaras has brought forward the selection of next Greek President”.
“The first round will be held December 17. The presidential candidate needs to secure 200 votes. If that fails, which is most certainly will, a second round will be held five days later on December 22. If the candidate fails to secure 200 votes then, a third round will be held a week later. On the third try, the candidate needs to secure 180 votes. If this fails, general elections will be held. The anti-austerity, and at times, anti-EMU Syriza Party is ahead in the national polls. Hence the existential concerns".
“Samaras has very little room to maneuver”.
“The fact that Greece is running a primary budget surplus (which excluded debt servicing costs), it is a better negotiating position with its creditors".
“Tspiras, the head of Syriza has indicated he seeks a restructuring of the debt held by the ECB, EU and IMF”.
“We maintain, as we did consistently during the initial Greek crisis, that as difficult as it is for Greece inside EMU, it would be worse to drop out”.
Key Quotes:
“Many fear that the political challenges in Greece could lead to its ultimate exit from the monetary union and default”.
“This concern has led dramatic loss in Greek bonds and stocks. Today's decline in Greek stocks (10.2%) is the largest since 1987. The 70 bp rise in the benchmark 10-year yield is among the largest of the year”.
“There have been a sequence of three issues that have forced the issue to the fore. First, over the weekend, the Greek Parliament approved the 2015 budget by 155-134 votes”.
“Second, the eurozone finance ministers blocked efforts by Greek Prime Minister Samaras to exit the assistance program”.
“These two developments set the backdrop for the third. Samaras has brought forward the selection of next Greek President”.
“The first round will be held December 17. The presidential candidate needs to secure 200 votes. If that fails, which is most certainly will, a second round will be held five days later on December 22. If the candidate fails to secure 200 votes then, a third round will be held a week later. On the third try, the candidate needs to secure 180 votes. If this fails, general elections will be held. The anti-austerity, and at times, anti-EMU Syriza Party is ahead in the national polls. Hence the existential concerns".
“Samaras has very little room to maneuver”.
“The fact that Greece is running a primary budget surplus (which excluded debt servicing costs), it is a better negotiating position with its creditors".
“Tspiras, the head of Syriza has indicated he seeks a restructuring of the debt held by the ECB, EU and IMF”.
“We maintain, as we did consistently during the initial Greek crisis, that as difficult as it is for Greece inside EMU, it would be worse to drop out”.