The constitutional court ruling in Germany is risk-positive, Rabobank says, given that the conditions set by the Court are not as severe as some participants had anticipated. The court said the lower house of parliament must approve an increase in German liabilities to the ESM in excess of EUR190 billion and both houses of parliament must be informed of ESM's decisions. "Given some [prior] concern the court might request an opt out clause be inserted into the ESM treaty and/or recommend a referendum, this looks to be "conditionality-lite" which is risk positive and, hence, is putting pressure on core paper at the time of writing," says strategist Richard McGuire.
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