Markets tense ahead of Tsipras speech, as polls show less support for no-vote

Speculation is rising regarding the content of Greek prime minister, Alexis Tsipras´s adress to the nation on Wednesday afternoon, as analysts continue to confide in an eventual agreement being reached.

Some market chatter held he might announce that the 5 July referendum had been cancelled whilst rumours began to circulate that he might even resign. No formal time had been provided for the start of his speech.

Indeed, political considerations were thought to be an important element in the prime minister´s decision making.

Tsipras had already come under fire on Wednesday morning from some of the most left-wing parties in the country following reports he would, to a large extent, accept the last proposal from international creditors.

However, one recent poll, published in the Efimerida ton Syntakton newspaper, seemed to point to less opposition among Greeks to creditors´s bail-out terms after banks were forced to close on Sunday.

The survey showed 54% of respondents would vote 'no' versus 30% who said they would vote 'yes'.

Nonetheless, the difference between the two camps narrowed after the 28 June announcement that banks would close. Of those canvassed after the announcement, 46% said they would vote 'no', but 37% showed their support for a 'yes'.

The number of undecided voters also increased, to 17% from 13%.

Grexit is about leaving the European Union

Much had been written over the previous few days regarding whether the referendum was about a vote on the bailout terms or euro membership.

Indeed, according to the most recent recommendations of the European Central Bank´s legal counsel, no one can 'force' Greece to abandon the single currency or not easily so in legal terms.

However, what was clear was that legally at least Greece could choose to abandon voluntarily, but that would also entail leaving the European Union as the country would be repudiating its treaty obligations should it leave the currency bloc.

An agreement in everyone´s best interest?

The base case scenario of analysts at RBS as of Wednesday morning was a 'yes' vote, government reshuffling/new coalition, and an agreement.

“A 'no' vote would bring Greece towards IOUs, with Grexit only possible voluntarily (i.e. with a vote). We remain confident that negotiators will head towards a final GRIN (GReece-IN) solution, as this is the one that bears the lowest cost for creditors, and especially for the Greek people,” the fixed income team led by Alberto Gallo at RBS wrote in a research note e-mailed to clients.

They estimated the minimum direct cost of Grexit at approximately €227bn, “almost twice as much the cost of keeping Greece in the Eurozone.”

“We assume the new Greek currency would be worth 40% less than the Euro in an exit scenario,” Gallo´s team added.