HALISTER1: Greece Risks Fall as Clarity on Debt Relief Emerges, UBS Says

Greece Risks Fall as Clarity on Debt Relief Emerges, UBS Says

(Bloomberg) -- Yesterday’s Eurogroup meeting on Greece supports both GGB and domestic stocks, and broader European risk sentiment, particularly in the periphery, as there’s clarity on debt relief, UBS analysts Lefteris Farmakis, Jeff Greenberg and Themos Fiotakis write in client note.
  • Potential for GGBs to become eligible for ECB QE rises; may take some time though as Greece needs to satisfy the standard criteria set by the ECB for program countries and an assessment of the sustainability of its debt
    • May have to wait at least for the debt discussions to conclude in 3Q or early 4Q; the complexity of this issue and the gradual and conditional process of debt relief could result in further delays
  • There was progress on two fronts overnight, with agreement on Greece’s policy framework hopefully paving the way for completion of the first review on May 24, and as a debt relief framework has now been established
    • The reference to lower long-term primary surpluses may also be a way to keep the IMF involved in the Greek bailout
  • NOTE: GGBs may rise toward 81 cents if there’s debt re- profiling and ECB purchases materialize, MS said last week
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)
1004Z GA (Hellenic Republic)

People
Jeff Greenberg (UBS Global Asset Management Japan Ltd)
Lefteris Farmakis (UBS Asset Management Japan Ltd)
Themos Fiotakis (UBS Asset Management Japan Ltd)

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