Greek Endgame Nears for Tsipras as Collateral Evaporates
Greek banks are running short on the collateral they need to stay alive, a crisis that could help force Prime Minister Alexis Tsipras’s hand after weeks of brinkmanship with creditors.
As deposits flee the financial system, lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity every week. In a worst-case scenario, that lifeline will be maxed out within three weeks, pushing banks toward insolvency, some economists say.
Could a Collateral Shortage Force Tsipras’ Hand?
“The point where collateral is exhausted is likely to be near,” JPMorgan Chase Bank analysts Malcolm Barr and David Mackie wrote in a note to clients May 15. “Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June.”
European policy makers are losing patience with Tsipras who said as recently as May 14 that he won’t compromise on any of his key demands. He’s planning to force a discussion of Greece at a summit of European Union leaders in Latvia that begins on May 21, a day after the European Central Bank’s Governing Council meets in Frankfurt.
Bonds Drop
Greek bonds tumbled on Monday, pushing 10-year yields up by the most since January. Yields on two-year Greek notes jumped 352 basis points to 24.44 percent. Greek bonds remain the best-performing sovereign securities over the past month, according to Bloomberg’s World Bond Indexes. The Athens Stock Exchange rose 1.6 percent, following a report that the European Commission is trying to broker a compromise deal. An EU Commission spokeswoman said she wasn’t aware of such a proposal.
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http://www.bloomberg.com/news/articles/2015-05-17/greek-endgame-nears-for-tsipras-as-bank-collateral-hits-buffers
