Grexit risks have subsided for now

Marathon talks last weekend eventually produced an agreement on reform measures to be undertaken by Greece in exchange for a temporary bridging loan and eventually a third bailout. The €7bn bridging loan will enable Greece to pay the €3.5bn due Monday on maturing bonds held by the ECB and also overdue payments to the IMF. The first tranche of the measures agreed by Greece and its creditors have been passed by the Greek parliament. About a quarter of PM Tsipras's Syriza party, however, voted against the proposals and this may result in a government reshuffle.

 Further reforms, including the establishment of a €50bn privatisation fund, will be considered by the Greek legislature by this Wednesday. Significant challenges remain, including the ability of the Greek government to implement the agreed reforms over the coming months and years and the impact they may have for the country's growth and debt sustainability prospects. Some form of debt relief is likely to be considered in due course and may include an extension of maturities, grace periods or lower interest rates, says Lloyds Bank.