27 Apr 2015
Greece debt talks to drag on into June – Goldman Sachs
FXStreet (Barcelona) - According to Goldman Sachs, Greece debt talks with its creditors will likely continue into June, causing peripheral spreads to see increased volatility as the expected June 20th ‘hard’ deadline approaches.
Key Quotes
“The ride over the next several weeks is likely to be bumpy. We believe negotiations could drag on likely through May and possibly into June. A ‘hard’ deadline could be July 20, when Greece faces a payment of €3.6 bn to the ECB, for which, we think, the country will not have sufficient cash.”
“Peripheral spread volatility is likely to increase as time goes by, as investors will associate a higher probability of default to a higher probability of Grexit, although this association will depend on what conditions have led to the credit event.”
“We believe that peripheral markets would sell-off as the July 20 deadline approaches but, as long as the dialogue is still ongoing, spreads between Italy and Spain versus Germany are unlikely to widen more than to around 200-250bp.”
“The tightening trend would resume upon Greece and its creditors finding a solution on the pace of reforms, how to fill the new funding gap and, eventually, also how to reduce the debt stock.
Key Quotes
“The ride over the next several weeks is likely to be bumpy. We believe negotiations could drag on likely through May and possibly into June. A ‘hard’ deadline could be July 20, when Greece faces a payment of €3.6 bn to the ECB, for which, we think, the country will not have sufficient cash.”
“Peripheral spread volatility is likely to increase as time goes by, as investors will associate a higher probability of default to a higher probability of Grexit, although this association will depend on what conditions have led to the credit event.”
“We believe that peripheral markets would sell-off as the July 20 deadline approaches but, as long as the dialogue is still ongoing, spreads between Italy and Spain versus Germany are unlikely to widen more than to around 200-250bp.”
“The tightening trend would resume upon Greece and its creditors finding a solution on the pace of reforms, how to fill the new funding gap and, eventually, also how to reduce the debt stock.