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Home / News / Economy / UPD Tsipras meets Merkel & Hollande, while S&P spoils the fun with Greece’s downgrading

UPD Tsipras meets Merkel & Hollande, while S&P spoils the fun with Greece’s downgrading

The crucial meeting of Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel and French President Francois Hollande started at 10:10 pm in Brussels at the margin of the EU – Latin America Leaders Summit.

Present at the meeting are also Greek political top negotiators, alternate Foreign Minister Euclid Tsakalotos and Minister Nikos Pappas.

tsipras merkel hollande

Against all odds and apparent rejections of the Greek reforms plan by the creditors, Chancellor Merkel arrived in Brussels obviously ready to reach a deal.

“A solution was possible to the Greek debt crisis. The goal is to keep Greece in the eurozone. I always approach these things with the attitude, if there is a will there is a way,” Merkel told reporters upon her arrival.

Speculation and expectations ran high that the three leaders can finally reach a political solution to the Greek debt problem tonight after four months of endless talks and bailout out negotiations that ended to impasse.

One of the point of disagreement is the Primary Surplus for 2015, with creditors demanding 1% and Greece proposing 0.75%. However nobody believes that the much anticipated Greek deal would fail of a 0.25% Primary Surplus.

The tri-party meeting has reportedly triggered optimism not only in the debt-ridden country but also among traders. There are reports for a mini rally in the Wall Street, while the European stock markets are closed.

And while the talks had just started in a good atmosphere, ratings agency Standards & Poor’s jumped in to spoil the fun. S&P downgraded Greece one notch, from CCC+ to CCC. More or less two notches before junk.

The downgrade to CCC reflects S&P views that

“the Greek government will likely default on its commercial debt within the next 12 months, without an agreement with its creditors.”

S&P has a negative outlook for the rating, which was cut one notch. Triple-C is a highly speculative rating on S&P’s scale.

The rating firm said the nation’s delay of a payment to the International Monetary Fund appears to suggest that the government is prioritizing domestic spending over scheduled debt service obligations.

It said further that Greece – creditor pact will not cover debt service requirements beyond September and that

Greece could issue parallel currency alongside Euro if deposit withdrawals continue.

In fact, S&P has done nothing else than compile a report based on the recent media and academics and “EU anonymous sources” reports and opinions and scenarios and speculations, everything that has been around in the last month or so.

As I write this post Tsipras, Merkel and Hollande have been talking for 1.5 hour.

UPDATE: after the meeting that lasted almost two hours, PM Alexis Tsipras told the press that:

“Talks in good atmosphere, we agreed to intensify talks, we tried to bridge gaps. We need viable solution with sustainable debt in order to return to growth.

European leaders realize that Greece needs a viable solution.”

Tsipras did not confirmed media rumors that he had asked for a 9-month extension for Greece’s bailout program.

 

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4 comments

  1. Switzerland should lend to Greece – that would be a win-win-situation.
    Swiss industry needs a weaker Franken and fears a Grexit most. There is also no moral hazard problem.
    The less trustworthy Greek promises are seen, the weaker the Swiss currency then resulting in more exports, lower unemployment and rising GDP (in CHF).

  2. Inside Germany:
    If it is ever to emerge from crisis, Greece will need more debt relief to allow it to restart its economic engines. That’s what Marcel Fratzscher, President of the German Institute for Economic Research
    Marcel Fratzscher, President of the German Institute for Economic Research (DW)