The Athens government has propped a package of reforms that is essentially the same as the one rejected by the referendum of 1st July, and it has also renounced pressing for an immediate restructuring of debt. In exchange, it is asking for 53.5 billion euros up to 2018…..<\/p>\n
<\/p>\n
Sign up for our free newsletter to receive weekly news from BONDWorld. Click here to register for your free copy<\/strong><\/span><\/a> <\/strong><\/span><\/a><\/span><\/p>\n Intesa Sanpaolo – Research Department For professional investors and advisers only<\/strong><\/p>\n The proposal contains enough concessions to win over majority of the Eurogroup, but it remains to be seen whether it will be enough to prevent blocking minorities.<\/p>\n Late on Thursday evening, the Athens government presented its proposals for the 2015 emergency budget, and for the fiscal and reform plan for the 2016-18 three-year period. The proposals are very much in line with the offer made by creditors to Greece on 25 June, and subsequently rejected by the referendum of July 5th. Specifically, the deadline for the reform of seniority pensions is now the end of 2022, the gradual suppression of integrative pensions has been accepted, and by the end of 2016 the Islands will be stripped of their special VAT regime. Greece has also confirmed the 3.5% primary surplus target for 2018, but not the fiscal goals for the 2015-17 three-year period: Greece commits to undertake the same fiscal consolidation effort already agreed on, not to reach the same primary surpluses, and the deterioration of the economic situation implies a worsening of fiscal balances. As a balancing element of this potential weakness of the proposal, neither the letter sent by Tsakalotos, nor the analytic document, make any explicit reference at all to requests for a restructuring of debt, which would have risked triggering a rejection of the plan by the Eurogroup. Mention is only made to “regulating” the trend of public debt.<\/p>\n The size of the requested ESM loan is a hefty 53.5 billion euros. Between 2015 and 2018, Greece will have to pay around 21 billion euros to service debt towards the IMF and the small flow of interests on the GLF, in addition to repaying 16 billion in residual bonds held by the Eurosystem under the SMP. However, Greece needs funds also to cover ordinary expenses, given the sharp deterioration of budget flows in the first half of the year and the uncertain outlook for the summer months.<\/p>\n Today the proposals will be scrutinised by the institutions (ECB, European Commission and the IMF), and their opinion will be then transmitted to the Eurogroup (possibly this evening). The finance ministers will meet on Saturday at 3:00pm to decide whether or not to accept Greece’s request for the ESM loan, made on Wednesday: the outcome of the meeting remains uncertain, due to the significant number of North and East European countries that had already accepted as the baseline scenario Greece’s exit from the euro area. However, almost total capitulation improves the chances of success, and the hawks inside the Eurogroup have not closed all doors, yet. The decision to activate the loan rests, in principle, with the ESM Board, and for some countries also requires a specific parliamentary mandate to the finance minister. Following the ESM Board’s decision, the European Commission must negotiate the conditional part of the programme, while the ESM drafts the financial proposal. The documents must then be approved by the Euro Working Group and by the Eurogroup.<\/p>\n Greece will also be the key item under discussion at the Euro Summit (Sunday, 4:00pm) and at the European Council (Sunday, 6:00pm).<\/strong><\/p>\n The domestic front presents a few criticalities, too. The radical faction of Syriza has stigmatised the stepping over of the “red lines” initially laid out for the negotiations, and is still not sure to vote in favour in Parliament. Potentially, this could make support from the centre-left parties (To Potami and Pasok) and New Democracy crucial at the time of the vote. Should this be the case, Tsipras would probably resign as prime minister, and then be reinstated at the head of a national unity government, with the mandate of implementing the reform programme. The parliamentary debate on the draft plan will begin at 1:00pm, and will be followed by a vote in plenary session either this evening or tomorrow. Later on, the issue will become whether the Greek government will show any commitment to implement a plan that it rejected just a few weeks ago.<\/p>\n Appendix Important Disclosures<\/strong> Source: BONDWorld.ch<\/p>\n","protected":false},"excerpt":{"rendered":" The Athens government has propped a package of reforms that is essentially the same as the one rejected by the referendum of 1st July, and it has also renounced pressing for an immediate restructuring of debt. In exchange, it is asking for 53.5 billion euros up to 2018…..<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1704","post","type-post","status-publish","format-standard","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1704"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1704\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n
\n
\n
Analyst Certification<\/strong>
The financial analysts who prepared this report, and whose names and roles appear on the first page, certify that: (1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect compensation has been or will be received in exchange for any views expressed. Specific disclosures: The analysts who prepared this report do not receive bonuses, salaries, or any other form of compensation that is based upon specific investment banking transactions.<\/p>\n
This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for the contents of this report. Please also note that Intesa Sanpaolo S.p.A. reserves the right to issue this document to its own clients. Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both authorised by the Banca d’Italia, are both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the conduct of US business.
Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should consult your investment advisor.
This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient’s own judgement.
No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities accept any liability whatsoever for any direct, consequential or indirect loss arising from any use of material contained in this report.
This document may only be reproduced or published together with the name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management Policy for managing effectively the conflicts of interest which might affect the impartiality of all investment research which is held out, or where it is reasonable for the user to rely on the research, as being an impartial assessment of the value or prospects of its subject matter. A copy of this Policy is available to the recipient of this research upon making a written request to the Compliance Officer, Intesa Sanpaolo S.p.A., 90 Queen Street, London EC4N 1SA.
Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (“Research Policy”). The Research Policy is clearly explained in the relevant section of Banca IMI’s web site (www.bancaimi.com).
Member companies of the Intesa Sanpaolo Group, or their directors and\/or representatives and\/or employees and\/or members of their households, may have a long or short position in any securities mentioned at any time, and may make a purchase and\/or sale, or offer to make a purchase and\/or sale, of any of the securities from time to time in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and circulates research to Qualified Institutional Investors in the USA only through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167 New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This document is intended for distribution only to professional investors as defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a printed document and\/or in electronic form. Person and residents in the UK: This document is not for distribution in the United Kingdom to persons who would be defined as private customers under rules of the FSA.
US persons: This document is intended for distribution in the United States only to Qualified Institutional Investors as defined in Rule 144a of the Securities Act of 1933. US Customers wishing to effect a transaction should do so only by contacting a representative at Banca IMI Securities Corp. in the US (see contact details above).
Valuation Methodology<\/strong>
Trading Ideas are based on the market’s expectations, investors’ positioning and technical, quantitative or qualitative aspects. They take into account the key macro and market events and to what extent they have already been discounted in yields and\/or market spreads. They are also based on events which are expected to affect the market trend in terms of yields and\/or spreads in the short-medium term. The Trading Ideas may refer to both cash and derivative instruments and indicate a precise target or yield range or a yield spread between different market curves or different maturities on the same curve. The relative valuations may be in terms of yield, asset swap spreads or benchmark spreads.
Coverage Policy And Frequency Of Research Reports<\/strong>
Intesa Sanpaolo S.p.A. trading ideas are made in both a very short time horizon (the current day or subsequent days) or in a horizon ranging from one week to three months, in conjunction with any exceptional event that affects the issuer’s operations. In the case of a short note, we advise investors to refer to the most recent report published by Intesa Sanpaolo S.p.A’s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI’s web site (www.bancaimi.com) or by contacting your sales representative.<\/p>\n