A Greek exit from the euro region is more likely to happen next year than this year, according to Steve Walsh, chief investment officer for Western Asset Management Co.
“The more likely scenario is that an exit would occur in 2013 as the populace finally rejects the austerity thrust upon it,” Walsh said in an e-mail. A Greek exit in 2013 would be more orderly because it would give institutions and investors time to prepare, he said.
If Greece leaves the euro this year, it will be a more chaotic exit, with a more forceful policy response from the European Central Bank and the rest of the euro-zone countries in an attempt to suppress the contagion, Walsh said. The response could take the form of more long-term refinancing operations or interest-rate cuts, he said.
Standard & Poor’s Ratings Services said earlier this week there’s at least a one-in-three chance of Greece exiting the euro zone in the coming months, following national elections June 17.
Western Asset, the Pasadena, California-based bond unit of Legg Mason Inc., has about $447 billion in assets under management.