The Royal Bank of Scotland (RBS) projects that Greece will face a sovereign default in the middle of December, because the Greek government is not able to enforce the required reforms, something that could provoke the rapid spread of the economic crisis.
In particular, the economic analyst of the british bank, Harvinder Sian, estimates that the imminent default of Greece will take place during the next scheduled inspection of troika on 11th of December. “The only reason why we believe that the inspection of the 11th of December is crucial, is because Greece has much more promises to make and also the regulatory authorities have to hope, until something goes wrong”, Sian underlines.
The analyst’s predictions are based on the fact that the Greek government will not be able to enforce the reforms while the targets of the financial adjustment seem very easy to meet. Furthermore, IMF and EU are not expected to be tolerant concerning Greece anymore.
In addition, Harvinder Sian emphasizes that the capitals of the private investors will not return to the Treasury Bond markets and the connected capital markets, due to the risk of the EU dissolution. He also adds that the last resort would be the intervention of the ECB into the European Bond markets and possibly into the private bond markets.
Finally, the bank underlines that if the default is not going to happen, a bond haircut in the level of 50-60% will be essential.
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