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Euro zone deterioration to halt - analyst

posted 3 Dec 2012, 05:47 by Mpelembe   [ updated 3 Dec 2012, 05:48 ]

Greece unveils details of a crucial bond buyback on Monday, which is central to the efforts of its foreign lenders to put Greece's debt back on sustainable footing. Standard Chartered analyst, Sarah Hewin, says a successful buy-back would close this chapter for Greece and secure the next bailout tranche.


"(QUESTION: As we look ahead to the euro zone numbers later, how bleak is that going to be in your view?) 

The Euro area numbers are all going to be the final data so I think that they will confirm what we already know about the region that the economy is in a downturn, what that downturn probably accelerated in the fourth quarter. We'll have the PMIs from the periphery this morning. And again, it's been a pretty bleak picture there so we're not expecting any particularly strong pick-up but nevertheless, at least we should see signs that the situation is not deteriorating further. 

(QUESTION: As I said, details or some details of this buyback in Greece coming through. Now, it's clearly critical, what are we going to be saying about this at the end of the day, at the end of the week?) I think as long as we see a successful buyback, then it'll close this mini-chapter for Greece. It will allow the release of the next bailout tranche. It will keep the IMF involved which is key. And it will sustain, at least inject some funding into an economy which is crying out for it. So hopefully, by the end of this week, we'll be looking into a more positive situation, at least temporarily for the Euro area. 

(QUESTION: Are you getting more or less worried about Spain?) I think I'm about the same. The debt servicing costs have come down. There's no particular market pressure on Spain to go for a bailout but it would make sense in my view for the economy to really lock in current relatively low borrowing rates and make sure that 2013 funding is adequately covered."