Greece to stay in Eurozone in short term: Lloyds

Trevor Williams, chief economist, Lloyds, says that in the short term, Greece will continue to remain in Europe and markets will react to it by risk on.

Below is the edited transcript of his interview to CNBC-TV18. Q: How are stakes piling up with respect to both Spain and Greece? How is the market viewing the Greece bond buyback program and will there is little more of risk-on now that program seems underway?
A: You are correct. The market feels that policy will push the issue of Greek default back into 2013 and possibly after the end of German election in next year, it is quite a short-term issue. With regards to Greece the news is usual. In the short term, Greece will continue to remain in Europe and markets will react to it by risk on.
The issue for Span is different, will Spain make a formal bailout bid or not, or will they continue to try to resist it and see if they can survive without seeking formal help from the Troika. Q: Yesterday, the Greece bond pricing in terms of buyback was at about 30 to 40 percent indicates that they are unlikely to be able to buy 40 billion euro. Do you think that could be a disappointment or has it already been factored in?
A: I don't think this will be factored in. Those who purchased Greek bonds at above 30-40 percent, if they sell those bonds they will make a loss. Those who purchased those bonds at lesser price, they will be able to make a profit, if they sell it. One needs to see how much market is present for the buyback program.