IMF head Lagarde reiterated that the IMF cannot join the third Greek bailout program as the Greek government debt is not sustainable, at least not by the IMF’s standards. EU countries officially want the IMF to join the program later this year, but they are unwilling to provide Greece the debt relief the IMF requests.
The Portuguese government received approval from the EC to inject EUR 2.7bn (1.5% of GDP) into state bank Caixa Geral de Depositos. The largest bank of Portugal, in terms of assets, experiences continued issues with its large portfolio of non-performing loans.
At the beginning of the week rating agency DBRS expressed its concerns about Portugal’s BBB-rating. More specific, DBRS referred to weak economic growth, problems of the domestic banking sector, high public and private debt and lastly the fragile political landscape.
Der niederländische Investmentmanager Robeco zieht für seine im Juni 2015 neu aufgelegte globale Multi-Factor Credit-Strategie für Unternehmensanleihen ein positives Fazit. Der insbesondere bei Pensionskassen und institutionellen Investoren gefragte Fonds hat derzeit ein Volumen von mehr als 240 Millionen Euro.
The Brexit will have ramifications for the peripheral countries, since it will result in further uncertainty and lower economic growth. Consensus positioning is overweight in the periphery and valuation is not really compelling.
We maintain our cautious stance towards euro periphery debt, despite the ECB’s QE program. The lack of further reforms and the failure to improve public finances sufficiently in the current benign environment makes the periphery vulnerable.
„Ohne eine Änderung der Parameter für ihr Anleihekaufprogramm wird es für die Europäische Zentralbank schwierig werden, zum Jahresende hin Staatsanleihen in Deutschland und in den Niederlanden zu erwerben“, so Kommer van Trigt, Leiter des Global Fixed Income Macro Teams bei Robeco.
The ECB did not announce any new measures at its July press conference. Brexit was mentioned as a downside risk to growth, but the ECB downplayed its importance by referring to the benign market reaction to the vote.
The market sentiment this week was clearly positive for risk markets and as a result peripheral government bond spreads tightened this week.