Goldman Sachs: Verfassungsrichter in Karlsruhe werden dem ESM zustimmen / Schumacher's explanation, from the note

[DWS] Für die Investmentbank Goldman Sachs besteht kein Zweifel: Das Bundesverfassungsgericht wird am 12. September den ESM durchwinken. Dies schreibt Goldman in seinem Fahrplan für den Herbst. Dem Plan zufolge wird Spanien am 14. September den Bailout beantragen.

GOLDMAN: Spain Will Formally Request A Bailout Next Weekend
[businessinsider] Here is Schumacher's explanation, from the note:
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With the ECB now having outlined its sovereign bond purchasing framework at least in skeletal form, the ball is now in the governments' court. Front and centre lies Spain.

Looking forward, we expect the following time-line in our base case:

September 12: German constitutional court gives its blessing to the ESM. Although we expect some procedural riders to be attached to the decision, this would allow German ratification to be completed and the ESM to be established in relatively short order.

September 13-14: Spain to make formal request for EFSF support at the Eurogroup meeting. With a large (and uncovered) redemption looming at the end of October (and under pressure from other Euro area governments), we expect Spain to move towards seeking support.

Second half of September: Conditionality required by EFSF will have to be accepted by the Spanish authorities, presumably requiring a parliamentary vote. In parallel, approval of other Euro area countries for the provision of EFSF support will need to be obtained: in some countries (notably Germany), this will also require parliamentary approval.

By end-September / early October: Memorandum of Understanding (MoU) codifying conditionality is signed, formalising the availability of EFSF support for Spain. At this point, the necessary conditions established by Mr. Draghi for ECB purchases of sovereign debt will have been met, well ahead of the large Spanish bond redemption.

At that point, the ECB would stand ready to purchase short-dated Spanish government securities should rates back up. Market conditions at that stage will dictate whether such interventions take place. Risks to this base case are largely political: a Spanish reluctance to seek EFSF support given the current lower level of yields; or German parliamentarians deeming the agreed conditionality too light. Even if these political risks materialise, we would still expect Spain to be forced to seek EFSF support in the course of October as market conditions deteriorate as a result of the delay.

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