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30 Jun 2015
Greece: Consequence of a non-payment to IMF – DB
FXStreet (Barcelona) - With speculation rife that Greece might miss today’s repayment to the IMF, Economists at Deutsche Bank highlight the possible consequences if such a scenario takes place.
Key Quotes
“It seems highly likely that the Greek government will not reimburse the IMF (Tuesday 30 June). IMF Managing Director Lagarde said she would inform the IMF Board “promptly” of the arrear. It is unclear whether this means immediately or whether she waits the normal 30 days.”
“Notifying the IMF Board will trigger the cross-default clause on the EFSF loans. The EFSF Board (euro area finance ministers) has the option to switch this off. An EFSF default would lead to the default of Greek Bonds, triggering CDS. We think it would be wise to avoid acting too swiftly and precipitate irreversible events before next Sunday’s referendum. Hence we would expect the EFSF Board to not be that hasty even if Lagarde acts immediately.”
Key Quotes
“It seems highly likely that the Greek government will not reimburse the IMF (Tuesday 30 June). IMF Managing Director Lagarde said she would inform the IMF Board “promptly” of the arrear. It is unclear whether this means immediately or whether she waits the normal 30 days.”
“Notifying the IMF Board will trigger the cross-default clause on the EFSF loans. The EFSF Board (euro area finance ministers) has the option to switch this off. An EFSF default would lead to the default of Greek Bonds, triggering CDS. We think it would be wise to avoid acting too swiftly and precipitate irreversible events before next Sunday’s referendum. Hence we would expect the EFSF Board to not be that hasty even if Lagarde acts immediately.”