Forex Flash: Risk off as market notices missing Greek toga – BTMU
FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets Research and the Bank of Tokyo Mitsubishi UFJ believes that one of the factors behind the shift towards risk aversion today is the realisation in the market that the Greek 'deal'was no such thing, with still plenty of detail and substance still not finalised.
He highlights an FT article today which, if accurate, deems it reasonable to conclude that yesterdays EU statement incorporates much guesswork and omitted much of the detail in the detailed document on the plan which has not yet been released.
Whilst an estimate of 124% Debt/GDP by 2020 is cited, such foresight is only contingent on "further measures and assistance", details of which were not announced. Halpenny notes that based on the details released, the Debt/GDP will actually be 126% in 2020. Additional measure will only be implemented once Greece is running primary budget surpluses.
Similarily, he notes that the debt level in 2022 is 115% of GDP, not 'substantially lower than 110%'as cited in the statement. He feels that this is clearly misleading and these examples of 'trickery'in spinning a story are unlikely to go down well with the financial markets. He writes, "Of course, this helps explain the non-involvement of the IMF, which wishes to await the results of the debt buy-back program - an essential part of the plan, estimated to account for about half of the debt reduction or 11% of GDP."
Halpenny feels that the success of the buy back programme is far from guaranteed and again we have no details in regard to the premium the authorities will offer on top of last Friday's closing price in order to entice private sector holders of Greek debt to sell now rather than wait until mature and get paid par. He finishes by stating that it all feels like another 'classic'Eurozone policy announcement that is more about buying time than resolving the problems in Greece and ultimately, he sees little chance of the Euro being lifted as a consequence.
He highlights an FT article today which, if accurate, deems it reasonable to conclude that yesterdays EU statement incorporates much guesswork and omitted much of the detail in the detailed document on the plan which has not yet been released.
Whilst an estimate of 124% Debt/GDP by 2020 is cited, such foresight is only contingent on "further measures and assistance", details of which were not announced. Halpenny notes that based on the details released, the Debt/GDP will actually be 126% in 2020. Additional measure will only be implemented once Greece is running primary budget surpluses.
Similarily, he notes that the debt level in 2022 is 115% of GDP, not 'substantially lower than 110%'as cited in the statement. He feels that this is clearly misleading and these examples of 'trickery'in spinning a story are unlikely to go down well with the financial markets. He writes, "Of course, this helps explain the non-involvement of the IMF, which wishes to await the results of the debt buy-back program - an essential part of the plan, estimated to account for about half of the debt reduction or 11% of GDP."
Halpenny feels that the success of the buy back programme is far from guaranteed and again we have no details in regard to the premium the authorities will offer on top of last Friday's closing price in order to entice private sector holders of Greek debt to sell now rather than wait until mature and get paid par. He finishes by stating that it all feels like another 'classic'Eurozone policy announcement that is more about buying time than resolving the problems in Greece and ultimately, he sees little chance of the Euro being lifted as a consequence.
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