A very quick responses in a client note from Chris Scicluna at Daiwa Capital Markets

In brief:

  • On the basis of a first look at the document just published, the Greeks appear to have made significant concessions, apparently accepting much of the most recent creditor proposal published on 28 June. And so it is also very similar to that rejected in the referendum.
  • There are still some areas where the proposals are weaker than sought by creditors ... (but) the cumulative fiscal tightening reported (circa €12-13bn) would be severe and exceed that in the proposal rejected by Sunday's referendum, principally reflecting the extra year of adjustment
  • Whether that is now sufficient to hit the surplus targets given the recent marked deterioration in economic and fiscal conditions is questionable, and so it remains to be seen whether creditors will want even more austerity
  • Biggest obstacle to a deal will be Syriza party and the Greek parliament
  • After the trauma inflicted by the referendum, in many Greek eyes Tsipras will be viewed as a coward and a traitor
  • *Tsipras will hold a meeting with Syriza members of parliament tomorrow morning (6am UK time)
  • Energy Minister Lafazanis, who is seen to have the backing of about 70 MPs, looks set to oppose the proposal
  • And if so, Tsipras will require the support of pro-euro To Potami and New Democracy party MPs to pass the required legislation if and when the proposals are voted upon in the Parliament.
  • A positive vote in the Greek parliament on Friday - notwithstanding the concern about whether additional austerity is demanded - would set Greece in better stead to secure a deal within the Eurogroup on Saturday afternoon and a rubber-stamping by leaders on Sunday (indeed the latter meeting might not even be required)
  • Would enable the ECB to up the ELA to Greek banks at the start of next week and - subject to approval in certain other member states - persuade the euro area subsequently to unlock bridge funding based on the release of past ECB SMP profits to avoid a Greek default to the ECB on 20 July
  • There is still some way to go before we get there, but at last we now have some cause for optimism.