Where to now with the eurozone/Greek crisis? Credit Suisse explains

Credit Suisse has provided a useful calendar, which we reproduce below, outlining the next chapters in Greece’s and more broadly the eurozone’s debt crisis.

The Swiss bank expects EFSF expansion probably to be ratified by 11 October.

The sixth tranche of aid for Athens will probably be agreed two days later, as already announced by Germany’s finance minister, they add.

“The [EU/ECB/IMF] Troika returned to Greece yesterday, a positive sign in our view, and local press suggest they will finish their review by the start of next week,” Credit Suisse’s note said.

While Greece is thought to run out of money around mid-October, Credit Suisse says “we feel that this date is somewhat more flexible, and the ‘hard’ date is the €1.1bn of coupon payments on 22 October.”

“The Greek government have voted through the required property tax to plug the 2011 budget hole, so we think the eurozone will (with reservations) agree the tranche. But it makes no sense to pay it earlier than absolutely necessary, so expect negotiations to go to the last minute.

“We think that €8bn is a small insurance premium to pay for the next three months, against the potentially high costs of an ‘uncontrolled’ sovereign default.”

Germany became the latest eurozone member to agree to expand the EFSF yesterday, to help nations such as Greece.

But Credit Suisse’s equity research team notes, from now on come votes in “the nations less keen on supporting Greece. Today we have the Austrian vote, Netherlands votes next week.

“On 4 September Slovakia said it would ratify the EFSF changes ‘not before December’, and now the Slovaks – the last to vote – are due to vote on 11 October.”

Overall, though, Credit Suisse’s team feels there is only “a negligible chance” of a vote failing, though the market consequences of any vote failing “would be big.

“We don’t think Greek debt can be restructured yet. The recapitalisation requirement for the Greek banking sector is around €16bn at current GGB prices, on our estimates, and the FSF only has €10bn available, and a further €20bn promised as part of Bailout 2.0, which is not yet ratified. So we would need EFSF ratification first in order to provide capital for the banking system.”

Where to now?

29 September: Troika returns to Greece to complete review

30 September: EFSF ratification in Austria

Week of 3 October: Troika to finish review by start of week

3 October: Eurogroup meeting

11 October: EFSF ratification should be complete, if Slovakia has passed it

13 October (approximately): Greece runs out off cash without disbursement, and extraordinary Eurogroup meeting proposed to approve sixth tranche

Mid-October: PSI deadline extended to this date, according to Imerisia

22 October: €1.1bn of coupon payments on GGB’s due: hard date for government cash requirement?

31 October: Greek government aim to have 2012 budget passed, Jean-Claude Trichet leaves ECB, Greek PSI due to take place (requires EFSF ratification)

October / November: Blackrock review of Greek banks’ lending books due to be sent to BoG?

30 November: IMF 6th review due; €5bn to be disbursed by EZ/IMF around two weeks later

December: Blackrock review of Greek banks’ lending books published/Greek banks recapitalised?

19 December: €1.2bn bond maturity

29 December: €4.6bn bond maturity

31 January 2012: Greek banks must submit capital plans to meet minimum 10% Core Tier 1

28 February 2012: IMF seventh review due; €10bn to be disbursed by EZ/IMF around two weeks later

20 March 2012: €14.5bn bond maturity

May / June 2012: French presidential and parliamentary elections due

30 September 2012: Greek banks must meet minimum 10% Core Tier 1

April 2013: Greek parliamentary elections due

July 2013: ESM operational (possibly one year earlier)

May 2013: Italian elections due

October 2013: German parliamentary elections due


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