Greece probably has until late July to come to an agreement with its creditors before the process of leaving the monetary union would begin. Possible delays in payments to the International Monetary Fund in June shouldn’t prompt the European Central Bank to shut off vital liquidity to Greek banks. By contrast, a default on marketable debt -- specifically the failure of the Greek government to pay 3.5 billion euros due to the ECB on July 20 -- would put Greece close to the exit. The Greek government and its creditors are still likely to reach a deal on a list of reforms before that crucial date.

1. Greece Risk Timeline
July 20 is Crucial
Bloomberg Intelligence Economist David Powell

2. Greece probably has until late July to come to an agreement
with its creditors before the process of leaving the monetary
union would begin.
Possible delays in payments to the International Monetary Fund in
June shouldn’t prompt the European Central Bank to shut off vital
liquidity to Greek banks.
Bloomberg Intelligence Economist David Powell

3. By contrast, a default on marketable debt -- specifically the failure
of the Greek government to pay 3.5 billion euros due to the ECB
on July 20 -- would put Greece close to the exit.
Bloomberg Intelligence Economist David Powell

4. The Greek government and its creditors are still likely to reach a
deal on a list of reforms before that crucial date.
The following is a list of all the relevant dates:
Bloomberg Intelligence Economist David Powell

5. June 24: The Eurogroup has met to discuss the latest proposals
submitted by Greece and adjourned with no agreement having
been reached. Alexis Tsipras is reportedly meeting with the heads
of Greece’s creditor institutions late into the night.
Bloomberg Intelligence Economist David Powell

6. June 25-26: Negotiations between finance ministers are set to
continue tomorrow ahead of the arrival of heads of state for a
European Council meeting in Brussels later on Thursday. Unless
an agreement is reached between finance ministers, the heads of
government will probably use this meeting to continue discussing
Greece, even though it is not on the agenda.
Bloomberg Intelligence Economist David Powell

7. This seems like a medium- to high-risk event. There’s a good
chance that proposals will not have advanced very much by the
time the heads of state arrive. They will then have an incentive to
make this meeting seem like Greece’s last opportunity to come to
an agreement. The scaremongering could lead to an acceleration
of deposit flight from Greece. In reality, this is unlikely to be the
last date for a compromise to be found because the Eurogroup --
the collective of euro-area finance ministers -- will meet again on
July 13, ahead of the the most important deadline of July 20. And
of course, further Eurogroup meetings can always be added to the
schedule.
Bloomberg Intelligence Economist David Powell

8. June 30: The extension expires for the “Master Financial
Assistance Facility Agreement,” as Greece’s bailout is known. This
will probably be a medium- to high-risk event. If, after this date,
Greece were no longer officially in a bailout program, the ECB
could decide to re-assess its collateral rules linked to Emergency
Liquidity Assistance, though the most likely outcome of this soft --
and arbitrary -- deadline is an extension if an agreement remains
elusive.
Bloomberg Intelligence Economist David Powell

9. In addition, Greece must make a payment of 1.2 billion SDRs to
the IMF on this date after having opted to bundle its payments for
June into one. That equals about 1.5 billion euros.
Bloomberg Intelligence Economist David Powell

10. IMF Managing Director Christine Lagarde has said there will be no
grace period for Greece beyond June 30, though the immediate
consequences of missing a payment to the IMF would be limited
–- after all, the next step is a strongly worded letter.
Bloomberg Intelligence Economist David Powell

11. July 1: The ECB’s Governing Council will hold a non-monetary
policy meeting in Frankfurt.
Bloomberg Intelligence Economist David Powell

12. This is a high-risk event. The policy makers are likely to discuss
how to react to the events of June 30, which could include the
expiration of Greece’s bailout package and the country having
missed a payment to the IMF. In an extreme scenario, the ECB
could decide as a result to cut off access to ELA, though that
seems unlikely.
Bloomberg Intelligence Economist David Powell

13. On May 28, ECB Vice-President Vitor Constancio showed some
flexibility saying that “there is no automatic -- and I underline the
word -- connection between a default of the Greek government
and the insolvency of Greek banks.”
Bloomberg Intelligence Economist David Powell

14. July 8: Greece will sell 26-week bills.
Bloomberg Intelligence Economist David Powell

15. This will be a low-risk event because local banks have been
willing buyers of short-term debt throughout the crisis.
Bloomberg Intelligence Economist David Powell

16. July 10: Greece must roll over 2 billion euros of Treasury bills.
This is a low-risk event.
Bloomberg Intelligence Economist David Powell

17. July 13: Greece will have to make a payment of about 360 million
SDRs to the IMF. That equals about 448 million euros.
Bloomberg Intelligence Economist David Powell

18. This is a low-risk event. If Greece has made it this far and is
already in arrears, missing another payment shouldn’t be a big
event. If it isn’t in arrears, it could once again ask for its payments
to be bundled into one, due at the end of the month.
Bloomberg Intelligence Economist David Powell

19. July 13: The Eurogroup will meet. This will probably be a medium-
risk event. It is the last scheduled meeting ahead of the July 20
payment to the ECB.
In other words, this may be presented as the last opportunity for the
finance ministers to agree on the disbursement of funds ahead of
that date. In practice, meetings can be added as required in the run-
up to July 20.
Bloomberg Intelligence Economist David Powell

20. July 14: Greece must repay 11.67 billion Japanese yen in yen-
denominated loans. That equals about 84 million euros. This is a
low-risk event.
Bloomberg Intelligence Economist David Powell

21. July 16: The ECB’s Governing Council will hold a monetary policy
meeting in Frankfurt, followed by a press conference.
Bloomberg Intelligence Economist David Powell

22. This seems like a medium-risk event because the policy makers
appear unlikely to adopt a change in stance ahead of the July 20
deadline. Journalists would be likely to drill Mario Draghi on how the
ECB would react to a default on its marketable debt.
This meeting is an obvious candidate for the ECB to signal its
intentions on ELA, should the July 20 payment be missed. An
announcement that the ELA facility would be closed in the event of
a default would cement that date as the deadline for a deal to be
reached.
Bloomberg Intelligence Economist David Powell

23. July 17: Greece must roll over 1 billion euros of Treasury bills and pay
around 71 million euros in interest. This is a low-risk event.
Bloomberg Intelligence Economist David Powell

24. July 19 and 20: Greece must make the largest coupon payments
of the month -- about 199 million euros and 104 million euros,
respectively -- on government bonds.
The total for the month is 810 million euros. In addition -- and more
importantly -- Greece’s 3.5 billion-euro bond held by the ECB matures
on July 20.
Bloomberg Intelligence Economist David Powell

25. This is a high-risk event. A default could cause the ECB to cut off
Greek banks’ access to ELA. That would probably be the first step to
an exit of the beleaguered country from the monetary union.
Bloomberg Intelligence Economist David Powell

26. July 31: Moody may review Greece’s sovereign debt rating. This
seems like a low-risk event because, with Greek bonds already
rated as junk by Moody’s, any decision on this date is likely to be
unimportant.
Bloomberg Intelligence Economist David Powell

27. Aug. 1: Greece will have to make a payment of about 141 million SDRs
to the IMF. That equals about 175 million euros. This is a low-risk
event. Greece may already be in arrears and it could again ask for its
payments to be bundled into one due at the end of the month.
Bloomberg Intelligence Economist David Powell

28. Aug. 5: The ECB’s Governing Council will hold a non-monetary policy
meeting Frankfurt. This seems like a low-risk event because most
of the substantive decisions regarding access to ELA will have been
already made. In addition, Greece will sell 26-week bills.
Bloomberg Intelligence Economist David Powell

29. Aug. 7: Greece must roll over 1 billion euros of Treasury bills. This is a
low-risk event.
Aug. 14: Greece must roll over 1.4 billion euros of Treasury bills. This is
a low-risk event.
Bloomberg Intelligence Economist David Powell

30. Aug. 20: Greece must make the largest coupon payment of the
month -- about 194 million euros -- on government bonds. The total for
the month is 211 million euros.
Bloomberg Intelligence Economist David Powell

31. In addition, Greece’s 3.2 billion-euro bond held by the ECB matures.
The riskiness of these events is path-dependent. If Greece has
managed to secure bailout funds by this date, the payment shouldn’t
create a problem.
If it hasn’t secured the funds, Greece will probably have defaulted
on its July 20 payment to the ECB already and this second payment
might be immaterial. If Greece hasn’t secured bailout funds, but
managed to somehow make the July 20 payment, this would be a
high-risk event.
Bloomberg Intelligence Economist David Powell

32. General Risks Without
Specific Dates
Capital controls
Bloomberg Intelligence Economist David Powell

33. At any point deposit flight could accelerate so quickly that the Greek
government is required to impose capital controls. Greek banks are
said to have enough collateral to access 93 billion euros in liquidity.
That’s only 8.9 billion euros above the latest cap leaked to the press of
84.1 billion euros.
As the Cyprus example showed, the introduction of capital
controls shouldn’t have any direct implications for Greece’s
membership of the euro, but could exacerbate political risks in
Greece by prompting civil unrest.
Bloomberg Intelligence Economist David Powell

34. Bloomberg Intelligence Economist David Powell
General Risks Without
Specific Dates
Government collapse

35. The fragile coalition led by Syriza is made up of a disparate group of
parliamentarians. At any point their differences could become too
great for them to remain united in a coalition. The prime minister
would then have to find a new coalition partner or hold fresh elections
in the event that a government cannot be formed.
Negotiations with creditors would probably be postponed and
some temporary extension granted in this event.
Bloomberg Intelligence Economist David Powell

36. General Risks Without
Specific Dates
Referendum risk
Bloomberg Intelligence Economist David Powell

37. If Greece’s Prime Minister Alexis Tsipras feels that he is unable to
negotiate a deal in line with his campaign promises, he could at any
point announce a vote on whether Greece should remain in the
euro area, given the terms and conditions on offer.
Bloomberg Intelligence Economist David Powell

38. Bloomberg Intelligence Economist David Powell
General Risks Without
Specific Dates
ELA

39. Though the ECB appears highly unlikely to shut ELA off suddenly,
the Governing Council could take that decision at any time. The shut-
down of ELA would probably be signaled in advance and linked to a
specific event -– to prevent accusations that the choice of deadline is
arbitrary.
A good candidate would be if Greece misses its July 20 payment
to the ECB.
Bloomberg Intelligence Economist David Powell

40. Bloomberg Intelligence Economist David Powell
General Risks Without
Specific Dates
Eurogroup meetings

41. The finance ministers of the euro area could announce new meeting
dates at any point. They have frequently added to their list of
pre-announced meetings in the past.
Bloomberg Intelligence Economist David Powell

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companies, credit and government policy, available on the
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