Whatever the outcome of Greece’s election on Sunday, seen as too close to call between Alexis Tsipras’s SYRIZA leftists and Vangelis Meimarakis’s New Democracy conservatives, markets appear confident its bailout will not hit the buffers.
The winner will almost certainly have to implement the reforms required at the head of a coalition government, which means a supposedly watertight agreement will be subject to horse-trading, both domestically and between Greece and its international creditors.
“Irrespective of which parties end up forming a coalition, Greece is most likely to head towards a period of relative political stability,” said Unicredit analyst Tullia Bucco in a report.
“The new government will fulfill the commitments undertaken with its lenders, having understood that the country ‘would not be saved at any cost’ as EU Commission President [Jean-Claude] Juncker recently said.”
Recent trends in Greek financial markets suggest that is a popular view.
The yield on benchmark 10-year Greek government bonds was down 18 basis points at 8.26 percent on Friday.
When campaigning for the election began in late August, it was around 9.2 percent.