Greece’s debt is a hot topic today, as tensions intensify if it will be able to make its payment to the IMF on Friday.  The crunchtime is not solitary to Greece as international creditors and investors too are on their toes. While Greece faces the ultimatum from Eurozone and International Monetary Fund officials, key leaders such as German Chancellor Angela Merkel, IMF head Christine Lagarde, ECB president Mario Draghi, French President François Hollande met at Berlin on late Monday to prepare what is reportedly the “final offer” to Alexis Tsipras, Greece’s prime minister. Greece is running out of cash and a default would be inevitable if Athens and Eurozone, ECB, and IMF do not come to an agreement to extend the bailout.

According to sources, these key leaders have reached a consensus on the ‘terms of a proposed deal’ that should be offered to Greece. Greece has also submitted a proposal to get more funds from its lenders.

‘Realistic’ Proposals from Tsipras

Meanwhile, Tsipras said that following a meeting with cabinet ministers, he has sent a “comprehensive proposal” to the creditors. According to Tsipras, the proposals are realistic and Athens has already made concessions.

“We have made concessions—because a compromise demands concessions—we know these concessions will be difficult but we have submitted a realistic plan for Greece to exit the crisis,” Tsipras said.

However, the steps toward the compromise have not gone down well with all Syriza members. Several members from the ruling party wanted a re-election if Tsipras lets the creditors have the major say. “When you are elected you are not given carte blanche. If a deal is achieved that is not considered honorable and is not promoting a compromise, the people will have to be asked before we sign it,” said labor minister Panos Skourletis.

How Much Greece Needs to Pay?
This Friday, Greece will have to repay around $338.7 million to IMF. This repayment, Greek officials said, would be made if a deal is reached. The aid has not been disbursed though.

However, this is not the only repayment that causes jitters in near term. Greece needs to make further payments on Jun 12, 16 and 19. European officials note the end of June to be the real crunch date, as the present bailout extension would officially come to an end then. Greece then needs to pay about 5 billion euros in July.

Will it Really Impact Europe?

Tsipras may be offered a deal that will place him in a spot of bother, as the Syriza party may split. Whereas, not accepting the offer will make Greece default on its debt, eventually making Grexit concerns true.

However, we need to understand how much this affects investment potentials in the continent, Europe. Some believe Tsipras’ claim that Greece’s collapse will affect the whole of euro region is hollow. The yield gap between Spanish and German debt has not been anything frightening. “The spread is close to the average of the past year, showing limited contagion compared with the blowout in Spain’s borrowing costs when Greece last faced a euro-area exit in 2012,” reported Bloomberg.

ECB’s quantitative-easing program is keeping borrowing cost for Euro’s indebted nations low. The sense of panic has also not been prominent. Separately, Morgan Stanley analysts said that declining bond prices in Greece have not spread to Spain or Italy in “meaningful” way. In fact, some say that Greece knows that nobody wants them to exit, and thus they are “playing the game for as long as they can”.

Interestingly, Professor Paul Krugman makes a data point of how much adjustment Greece has already done. He says the costs of the adjustments were so huge that the country should have been in a better position if it had exited the euro in 2010.

Krugman writes: “You can make an even better case that Greece would have been much better off if it had never joined in the first place. But at this point these are sunk costs. If Greece can negotiate a halfway reasonable compromise, one that more or less pauses further austerity, it’s hard to see that the risks of exit would be worth it.”

3 European Funds to Buy

The region is still a favorable investment destination. Europe has come up with encouraging economic indicators with the consumer-price inflation data joining the list of positives very recently.

Eurozone consumer prices increased for the first time in six months in May, indicating inflation is picking up from a low level. Core inflation rose to 0.9% in May from April’s record low figure of 0.6%. Eurozone inflation data also boosted European yields. The rounds of monetary easing in Europe are also a major boost and the Euro zone has picked up momentum with 0.4% growth in the first quarter, the highest quarterly growth in nearly 2 years.

Here we present 3 Europe mutual funds that either carry a Zacks Mutual Fund Rank #1 (Strong Buy) or Zacks Mutual Fund Rank #2 (Buy).

Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.

These funds carry no sales load, have low expense ratio. The minimum initial investment is within $5000. These funds are not only in the green so far this year, but have positive total return over the last 1, 3 and 5 year periods.

Henderson European Focus I (HFEIX - MF report) seeks capital growth over the long term. HFEIX invests a majority of its net assets in equities of European firms. Henderson European Focus I has no limits regarding geographic asset distribution within Europe. It may invest in one country or limited number of countries.

Henderson European Focus I currently carries a Zacks Mutual Fund Rank #2. HFEIX has total return of 11.5%, 3.1%, 14.7%, and 11.1% over the year-to-date, 1, 3 and 5-year periods. HFEIX carries an annual expense ratio of 1.11% as compared to category average of 1.44%.

Ivy European Opportunities I (IEOIX - MF report) invests a lion’s share of its assets in equity securities of European firms. IEOIX invests in European firms of all sizes and mostly those who are located in developed markets. It may however invest to a lesser extent in companies located in new or comparatively underdeveloped economies of Europe.

Ivy European Opportunities I currently carries a Zacks Mutual Fund Rank #1. IEOIX has total return of 9.8%, 2.6%, 10.7%, and 9% over the year-to-date, 1, 3 and 5-year periods. IEOIX carries an annual expense ratio of 1.19% as compared to category average of 1.44%.

Franklin Mutual European Z (MEURX - MF report) seeks capital appreciation, which may occasionally be short-term. MEURX invests a large chunk of its net assets in securities of European companies. Shareholders are given 60 days' advance notice of any change to the 80% policy regarding Investment in securities of European companies.

Franklin Mutual European Z currently carries a Zacks Mutual Fund Rank #1. MEURX has total return of 8.6%, 3.9%, 13.5%, and 8.5% over the year-to-date, 1, 3 and 5-year periods. MEURX carries an annual expense ratio of 1.03% as compared to category average of 1.44%.