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20 Apr 2015
Greece deal likely soon – JP Morgan
FXStreet (Barcelona) - According to JP Morgan, a Greece deal with its creditors is likely in this week’s or the May meeting.
Key Quotes
“One potential threat to the increasingly solid economic upturn is negative tail risk associated with Greece. The prospects for an interim deal between Greece and the rest of the region at the April 24 Eurogroup meeting dimmed this week. Budget data through March suggest the new administration has been able manage its cash flow position partly by running up arrears and finding some extra revenues.”
“Assuming no agreement next week, the focus will shift to the Eurogroup meeting on May 11, with a near €800 million payment to the IMF due the following day.”
“Our base case remains that a deal will be struck, as Greece covering both the May 12 IMF payment and the subsequent primary expenditures without one is unlikely.”
“In the event that Greece misses a payment to the IMF, we believe it is a mistake to think that the ECB would be compelled to suspend ELA lending to the Greek banks, precipitating a Greek Euro exit. More likely is that ELA would continue but extension of it would be kept to a bare minimum, and that Greece would impose capital controls.”
Key Quotes
“One potential threat to the increasingly solid economic upturn is negative tail risk associated with Greece. The prospects for an interim deal between Greece and the rest of the region at the April 24 Eurogroup meeting dimmed this week. Budget data through March suggest the new administration has been able manage its cash flow position partly by running up arrears and finding some extra revenues.”
“Assuming no agreement next week, the focus will shift to the Eurogroup meeting on May 11, with a near €800 million payment to the IMF due the following day.”
“Our base case remains that a deal will be struck, as Greece covering both the May 12 IMF payment and the subsequent primary expenditures without one is unlikely.”
“In the event that Greece misses a payment to the IMF, we believe it is a mistake to think that the ECB would be compelled to suspend ELA lending to the Greek banks, precipitating a Greek Euro exit. More likely is that ELA would continue but extension of it would be kept to a bare minimum, and that Greece would impose capital controls.”