With Greece going to the polls January 25th, what might happen in the election process?
Like the elections in 2012 it looks like there won’t be a party with an overall majority. If that is the case the leading party will be given 3 days to secure a coalition government. If they fail to do that then the 2nd placed party is handed the baton to try and form a coalition. If there is no outcome from that then the third placed party have a go. If they fail to cobble together a coalition then they all meet the president who will try to broker a deal. If that doesn’t work then a new election is called and will be held within a month.
Greece’s Ekathirmerini news had the full election process from 2012 here
While all that is happening Greece has a €500m payment due to the IMF and Fitch is already out saying that the snap elections are a credit risk. So far the Syriza party, who are ahead in the polls currently, have softened their tone over an exit from the eurozone but have maintained that they want to renegotiate the terms with the Troika, and that’s where the market unease is mainly coming from. If it looks like Syriza will win then it could put any bailout payments/repayments at risk if Syriza put the block on them while they try to renegotiate a deal.
If it’s anything like 2012 (and it looks like it’s going to be) then this is going to be an event that could drag on for over a month. One thing that we do know with pre-election polls is that while they may indicate that Syriza is leading it’s a whole different ball game when people have to do it for real. Either way, it’s going to be a rough ride for Greece and potentially for markets and the euro, especially with the ECB meeting coming 3 days before the election.
Greek bonds have shown their reaction to the election news with 10’s rising to 9.84% yesterday and holding at 9.59% today. Nearly 10% return for a eurozone, ECB backed country has got to be great deal hasn’t it?
Like the elections in 2012 it looks like there won’t be a party with an overall majority. If that is the case the leading party will be given 3 days to secure a coalition government. If they fail to do that then the 2nd placed party is handed the baton to try and form a coalition. If there is no outcome from that then the third placed party have a go. If they fail to cobble together a coalition then they all meet the president who will try to broker a deal. If that doesn’t work then a new election is called and will be held within a month.
Greece’s Ekathirmerini news had the full election process from 2012 here
While all that is happening Greece has a €500m payment due to the IMF and Fitch is already out saying that the snap elections are a credit risk. So far the Syriza party, who are ahead in the polls currently, have softened their tone over an exit from the eurozone but have maintained that they want to renegotiate the terms with the Troika, and that’s where the market unease is mainly coming from. If it looks like Syriza will win then it could put any bailout payments/repayments at risk if Syriza put the block on them while they try to renegotiate a deal.
If it’s anything like 2012 (and it looks like it’s going to be) then this is going to be an event that could drag on for over a month. One thing that we do know with pre-election polls is that while they may indicate that Syriza is leading it’s a whole different ball game when people have to do it for real. Either way, it’s going to be a rough ride for Greece and potentially for markets and the euro, especially with the ECB meeting coming 3 days before the election.
Greek bonds have shown their reaction to the election news with 10’s rising to 9.84% yesterday and holding at 9.59% today. Nearly 10% return for a eurozone, ECB backed country has got to be great deal hasn’t it?
