No Decision on Greece Aid
The meeting of Eurozone finance ministers has just concluded without any final decisions being taken on whether to release the next tranche of Greek aid. Divisions between the IMF and Europe are now plain for all to see with IMF Managing Director Lagarde insisting that the goal of returning Greece’s debt-to-GDP ratio to 120% by 2020 should remain in place. Eurogroup Chair Juncker sees things differently however, and wants to give Greece until 2022 to reach that same target. Lagarde was very clear about the existence of a difference of opinion. Although two years may not seem like much, we note that it could have pronounced implications for all parties in the discussions, not to mention the remaining private sector bondholders. Juncker was quite clear however that ministers did not favour any single way of cutting the burden of Greek debt. It seems a breakthrough is still some way off with finance ministers now due to meet again on Nov. 20. They may also schedule a conference call on Nov. 28. The null outcome just now, although expected, will increase the market attention on Tuesday’s issue of Greek T-bills. Already a newspaper report has suggested that the ECB has loosened collateral rules further in an apparent bid to ensure the auction is a success. Today, UK CPI is due ahead of the quarterly inflation report on Wednesday.
Click here to read the full report: UBS Morning Adviser Asia
UBS Investment Bank