The Eurogroup seemed to have decided to approve the second Greek bailout once again. They even signed an agreement related to the Greek banks.
Nevertheless, the bailout wasn’t approved. The “final decision” was delayed to March 9th. Nothing is final expect the upcoming Greek redemption. And time is running out. Here are 5 more things that could delay the Greek bailout, until time is out and bankruptcy is announced.
Smokes and Mirrors
Headlines were quick to come out of Brussels. It seemed that the Eurogroup leaders approved Greece’s long list of prior actions and were ready to give a green light to the second bailout. The bailout was agreed on February 21st, but required Greece to pass 38 changes in parliament.
But, the whole thing depends on a completion of the Greek bond swap, also known as PSI. The ISDA didn’t bother today, as they didn’t trigger a credit event.
Also the ISDA actually delayed the decision. They were aware of the “evolving situation”.
And then another thing slipped in: the Eurogroup still needs a “final assessment” if Greece fills the conditions. The “final decision” is on Friday, March 9th.
5 Hurdles for Greece
- Economic data could still deteriorate in Greece and shake all the economic assessments. For example, Manufacturing PMI for Greece dropped further.
- Compliance: The troika could find that Greece didn’t actually pass the required decisions.
- The bond swap could go wrong: by not getting enough volunteers” for the bond swap.
- Credit event: Or, if the bond swap goes well, ISDA could finally trigger a credit event, causing everybody to rethink.
- IMF Contribution: The IMF could decide on a very low contribution to the second bailout, putting more strain on the euro-zone countries
All in all, time is passing by and Greece doesn’t receive the bailout funds. The debt struck country has bond redemption due on March 20th. The money isn’t available.
If you add 7 days of grace, you get March 27th. The scenario of a bankruptcy announcement on March 23rd remains valid.
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