Greece may get next tranche of bailout: StanChart

Sarah Hewin, Regional head of research, Standard Chartered, says that there are chances that the Greek authorities will achieve the target of 30 billion euros of debt buyback set by themselves and hopefully they may get next tranche of bailout from the EU Council.

Also read: Budget, politics may play on market's mind from Jan: Emkay Below is the edited transcript of her interview to CNBC-TV18. Q: European markets have opened flat and they seem to have ignored the happening in Italy. Do you think the market has been complacent or is the risk not too high?
A: The Italian election was anyway slated for either March or April. The weekend news has probably brought it forward by few weeks. We have not got off to a good start and I think the uncertainty that will be caused by Berlusconi reappearance will start to weigh on markets in the New Year. Right now, the focus is clearly on the US and the fiscal cliff risk.  Q: How would you asses the fiscal risk cliffs at this juncture. We do get off and on sporadically confidents or at least confidence boosting statements from Obama and sometimes even from Republicans. Do you think that they will ask for extension of one month or more?
A: Anything is possible at the moment. There is couple of signs that things are moving in right direction. Overall, we assume that they will probably go all the way to the end of the year before they come to any decision.  
Unfortunately, there were discussions about going over the fiscal cliff in the first few days of 2013. If that happens then there would be severe shocks to the markets and we may quickly see some resolution reaching in the first half of January for 2013. Q: We have the details of the debt buyback being released today evening. We also perhaps have a euro-zone finance minister called today. Do you think Greece's next tranche will be approved today, is that a trigger for the markets?
A: It may be a trigger. There are chances that the Greek authorities will achieve the target of 30 billion euros of debt buyback set by themselves. So, they are waiting to see if there is enough support from the Greek banks to reach that target. I understand that they are pretty close and it should allow the release of a next bailout tranche for Greece, probably will get approval when the European (EU) Council which will meet on Thursday and Friday for the upcoming summit. Q: What are your expectations from the EU Council meet? Will there be something concrete in terms of the banking union at all? Should the markets get excited or worry about this EU Summit?
A: The banking union is somewhat esoteric. I am unsure that the markets will pay a huge amount of attention to it. There is some sort of an impasse on the very first stages of banking union agreeing the single supervisory mechanism. So, that is sort of agreeing that the European Central Bank can become the supervisor for the region. The question is whether they would oversee all the banks in the euro area or whether it would be major banks.
Progress would be better received than no progress at all. But we should get an early heads-up of how negotiations are proceeding because the euro group, which meets tomorrow will discuss on this and laying out the plans ready to be approved hopefully on Thursday and Friday by their leaders. Q: What do you expect from Bernanke? Will he say something exciting on the asset purchase program? Is the market pricing in anything?
A: Market is assuming that there will be an end to the Operation Twist. So, in effect we are likely to have a very mild additional easing as we saw the whole of USD 85 billion of Quantitative Easing (QE) being focused on treasuries and on Mortgage-backed Securities (MBS).
Beyond that, we think that probably any other changes will be delayed until next year. There is a question of whether they announce that they are going to target particular economic indicators like unemployment and inflation. But in our view that's more likely to emerge in the next year when there is change in the Federal Open Market Committee (FOMC) voting panel.