Greece Aid Decision Postponed
The meeting of Eurozone finance ministers concluded without any final decisions being taken on when (or indeed whether) to release the next tranche of Greek aid. Furthermore, divisions between the IMF and Europe were plain for all to see at the post-meeting press conference. IMF Managing Director Lagarde insisted that the goal of returning Greece’s debt-to-GDP ratio to 120% by 2020 should remain, while Eurogroup Chair Juncker wants to give Greece until 2022 to reach that same target. 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 stressed however that ministers have not yet settled on any particular means to reduce the burden of Greek debt. It seems a breakthrough is still some way off with Eurogroup finance ministers now due to meet again on Nov. 20. There is also the possibility of a subsequent conference call on Nov. 28. Indeed Greece’s finance minister said he does not expect the aid to be disbursed until end-Nov or even early-Dec. Even though expectations were managed down in advance, the absence of an agreement overnight will increase the market’s focus on Tuesday’s auction of Greek T-bills. Already a newspaper report has suggested that the ECB intends to loosen collateral rules further in an apparent bid to ensure the auction is a success. Both Juncker and EU Commissioner Rehn were also adamant overnight that the EUR5 bn worth of T-bills which mature on Friday will be rolled with ease. Today, UK CPI is due ahead of the quarterly inflation report on Wednesday.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank