Greece is set to have a new coalition government according to ANA. New Democracy, PASOK and Democratic-Left will form the coalition and Antonis Samaras would be the Prime Minister.
Samaras, Venizelos and Kouvelis will meet in the New Democracy headquarter at 17:00 GMT according to Reuters.
On the other hand, in a news published by CNBC, the European Union would have accepted to renegotiate with Greece the terms of the second financial bailout because the original has become outdated according to Eurozone official.
“We have to sit down with our Greek colleagues and say: this is where we should be in July, and this is where we are in July, and there is a delta. Let’s find out what the delta is and then how to deal with the delta,” the official said.
Representatives from the IMF, ECB and European commission are waiting for a new government in Greece to visit the Hellenic country and to review and negotiate the program.
Early on Tuesday, Samaras affirmed that the new cabinet would start negotiations with the EU to soften the harsh conditions of the bailout plan.
UBS analysts comment: “Although we do see a government emerge once coalition negotiations have concluded – the only question is how long such an administration can survive.” They also add that it is “highly likely that uncertainties around Greece will keep markets volatile over coming months.”
IMF firewall boosted to $430 billion
During the second day of G20 talks in Los Cabos, Mexico, world leaders continued putting pressure on EU officials to present a definite strategy for resolving the debt crisis which is negatively impacting the global economy.
According to reports, G20 leaders are trying to convince German Chancellor Angela Merkel to abandon her austerity plan and focus on boosting growth and employment in the EU. Chuck Butler, President of EverBank World Markets, considers it an ineffective approach: “For one thing, the German constitution, if you will, is not going to approve her saying that she’ll pool euro-area debt. So, the G-20 leaders are barking up the wrong tree.”
EU leaders announced however their determination to form a closer banking union in the area, as a means of containing the debt crisis. Integrated banking supervision and repayment guarantees to bank depositors are some of the key features of the union.
Meanwhile, G20 leaders agreed to increase IMF resources to the sum of 430 billion dollars. BRICS countries were the biggest contributors. China vowed to provide 43 billion dollars while Russia, India and Brazil 30 billion dollars.
Christine Lagarde said that these funds would be used as a “second line of defense”, and thanked the member countries for their support.
Strong demand, high yields at Spanish debt auction
At an auction of 12- and 18-month bonds on Tuesday Spain raised 3.04 billion euros out of the 3.0 billion target. Still, the yield the country had to pay to issue 1-year debt reached a euro area record high of 5.074% in comparison with 2.985% seen at the previous auction. The bid to cover ratio was at 2.2 vs 1.8 in May.
18-month bonds were sold at an average yield of 5.107%, up from 3.302% the previous month. The bid to cover ratio was at 4.4 vs 3.2 in May.
In the opinion of the BBH team of analysts “sustained high yields will eventually force Spain into taking a full-fledged bailout. It was reported that results of the private sector audit of Spain’s banking sector will be delayed until September rather than the scheduled July. The market simply does not have this kind of patience.”
On Thursday Spain will auction debt maturing in April 30, 2014, July 30, 2015 and July 30, 2017.