EU leaders to choose large bailout/haircut for Greece, if IMF unwilling to participate

The question of the IMF participation is another hurdle. Indeed, media reports recently stated that the IMF would only be able to contribute to the third bailout if Greece were granted some form of debt relief. However, a haircut has been ruled out by the EU leaders so far. 

Of the close to €80bn that Greece needs to borrow, up to €60bn was supposed to come from the ESM and the remainder from the IMF. While EU leaders may continue to assume that a new IMF programme will be discussed at a later stage, and that the IMF is involved only on a technical basis as one of the institutions monitoring the ESM programme, its non-participation at the beginning of the ESM programme may further complicate the talks. 

"If the nonparticipation of the IMF (at least in the first few months) is confirmed, the EU leaders and the ESM would have to choose between a larger-than-expected bailout package or a haircut (or a large debt re-profiling)", says Societe Generale. 

This, combined with renewed political risks in Greece (with early elections looking increasingly likely this autumn), confirm that Grexit risks remain elevated and that the mid-August deadline to finalise the ESM programme is likely to be missed.