RBC cautiously confident of solution on EU crisis shortly

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In an interview with CNBC-TV18, Gustavo Bagattini of RBC Capital Markets, spoke about the happenings in euro-zone region and his outlook.

Below is an edited transcript of his interview on CNBC-TV18. Also watch the accompanying videos. 

Q: What have your thoughts been on the Greek deal? What do you expect to see from here?

A: The negative tone that has predominated in the European [market] open is mainly due to last night's euro group [meeting] and the fact that some people were expecting a final deal to be agreed and everything to be announced, and the fact that we are not quite there yet. In a way this is part of the political posturing and the negotiations that are going on. We are going to see this kind of volatility as we inch towards a deal, but it's clearly not helping sentiment right now.

In terms of what it means for the bigger picture, in terms of agreeing the second bailout, it hasn't really changed anything. There is still a lot of risk and uncertainty from the Greek political front and European leaders are trying to do their best to ensure that whatever does get approved doesn't get changed once there is a change in government in Greece.

Q: Apart from that its clearly been a liquidity drive that the market has been focused on. Do you expect risky assets to continue being in flavour and if yes, what markets would you prefer from here on say in the first half of the year?

A: We are not going to have the long term refinancing operation (LTRO) until the end of the month and it was hard to get much indications from President Draghi at yesterdays press conference other than the fact that the actual increase in the collateral pool is probably not as large as some people were expecting.

It was definitely much smaller than what equity analysts were expecting and smaller than perhaps what even fixed income analysts were expecting.

It hard to take a strategic call in terms of direction until the Greece situation remains as it is. We still see volatility and a lot of trading on headlines. But I remain cautiously confident that we will get a deal in the coming weeks or in the coming days. It's really going through the hurdles, going through the political processes, and that's a lot slower than what markets like.