Is A Big US Bank Betting On A Greek Default In 11 Days?

Tyler Durden's picture has disclosed something interesting. According to the Greek website, an account, allegedly a large US bank, has been dumping, in what it classified as "panic selling", its holdings of a 10 Year GGB maturing on April 20, 2010, or in 11 days. What is unclear is whether the bank has been trading for its own account or for a client. What is clear, is that the seller is certainly not too convinced that the bond will see a repayment of principalwhen it matures, in other words believes that Greece will go bankrupt before April 20th.

From the source:

It is clear that this move is panic.

The seller believes that in the next 11 days Greece will go bankrupt, there will be default or anything else to sell a bond expires in 11 days.

Who sold under a sign is a large U.S. bank.

The only thing that has not been established is sold on behalf of a client or on their own behalf?

Both are negative developments ...

We did some snooping of our own and uncovered one bond issue that is due on April 20, however it is a 5 Year, not a 10 Year as claims. The 5 Year bond in question is a €8.22 billion in size, issued at 100.037, and was trading at 99.9008x99.9058.

Yet even if the Greek site simply mistook the tenor of the bond, a TRACE of recent activity indicates a rather substantial spike in trading (and thus both buying and selling).

To be sure, someone is unwilling to take the risk of picking 20 bps through maturity for holding this bond another 11 days. Alternatively, anyone convinced that Greece is going under in two weeks time, and that this bond will trade flat, can arb the accrued interest by selling today with the expectation that the bond will not only plunge but the 3.1% of accrued interest payment will certainly not be owed. One thing that is certain: this is an outflow of €8.2 billion that Greece would certainly much rather not have to stomach. This bond will take out all the incremental cash generated from the most recent "successful" bond auction and then some.

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GS is short Gold's picture

That's just Leo K. He's raising some cash to buy some more solar stocks.

Village Idiot's picture

Maybe Leo is getting a free toaster for referring to solar?  A solar toaster? 

Lionhead's picture

I heard he was in Athens yesterday buying the Hellenic Heroic 100 year bond & was selling his solar stocks into strength today because he's afraid the US market is going to collapse. They've got a helluva coupon & a convertible Euro/Drachma feature if the worst happens. Symbol GGB HERO 100. He's a true patriot; Greece salutes him. ;)

Leo Kolivakis's picture

Long Chinese solars/ Long Greek bonds/ Long NBG/ SHORT ZH fleas! LOL!

knukles's picture

WTF cares if someone is selling GGB's.  Fer Christ's sakes, sombody else is buying it. 

Ripped Chunk's picture

11 days?  Just enough time for some made-for-TV rioting. Can't wait!

Leo Kolivakis's picture

It took Nazi Germany 11 days to capture Crete in WWII. Do you really think Greece will fall in the next two weeks?

chindit13's picture

Leo, just as today's Americans are hardly 'the Greatest Generation", today's Greeks are hardly the 1940's style model.  Wake up from the dream.

Perhaps those who survive the coming maelstrom, in Greece and elsewhere, will be selected for their determination and character, just as the first Depression and WWII honed the minds and bodies of the survivors of those events.  There are an awful lot of current fat and lazy folks, however, who will be culled from the population.  The fruits of success contain the seeds of failure.

This is what nature does, has always done, and always will do.

lucky 81's picture

yea, just look at that guy  winston, oh i forget his name.... church or something, lived on a hill . the war turned him into an athlete didn't it.

redguard's picture

Wasn't he strong mentaly?

Alexandra Hamilton's picture

Perhaps those who survive the coming maelstrom, in Greece and elsewhere, will be selected for their determination and character, just as the first Depression and WWII honed the minds and bodies of the survivors of those events.  There are an awful lot of current fat and lazy folks, however, who will be culled from the population.

Very interesting point of view. So you are looking at this as a planned social experiment aimed at selecting the 'right breed' of people and eliminating the rest as a drain on the earth resources.

It does have a smack of Naziism about it, though.

chindit13's picture

No planned social experiment. Nature. People who fail to see what's coming, or get in the way of it by accident or stupidity, tend to fall by the wayside.

Adam Neira's picture

Στους οπο?ους Concern Μα?ου,

Χαιρετ?σματα απ? την Αυστραλ?α.

Προσπαθ? να μ?θω το ?νομα του 24 ετ?ν Κρητικ? ελληνικ? ?νδρες απ? το Ηρ?κλειο, ο οπο?ος κατηγορ?θηκε για τις δ?ο βομβιστικ?ς επιθ?σεις της συναγωγ?ς στα Χανι?, Κρ?της. Δι?κεται για το βρ?δυ της Παρασκευ?ς 22 Ιανουαρ?ου, 2010.

Αστυνομικ? Αρχ?

Αρχηγ?ς Αστυνομ?ας - Φ?της Liotsakis.

32, Γιαμπουδ?κη Street 73134, Χανι?, Κρ?τη
Tηλ.: +30 28210 46162, 42640
Fax: +30 28210 41053

james.miller's picture
Greece is sort of like the Titanic. 


Eighteen things went wrong, and since they all went wrong at once it’s problematic.
  • Greece's Titanic Collision with Spread Iceberg: 14th April

  • Greece's Titanic Sinking: 15th April


Greek Titanic Dates & Times
  • Spread Iceberg begins forming
  • Greek Titanic collides with Spread Iceberg: April 14th
  • Greek Titanic sinks: April 15th
  • EU Carpathia returnes to New York (IMF)  with Greek Titanic's "survivors": April 18th
  • Greek Titanic's wreckage located: September 1

CookieMonster's picture

I'm just not devious enough to figure this out. It will only prove that Greece needs bailing out by the IMF and US stocks will go up, up, up......

i.knoknot's picture

in 11 days?

"within 11 days..." as found in the article.

important distinction, methinks...

Sudden Debt's picture

which bank would that be? CITIBANK? :)

DrFever's picture

To be fair, we've heard many rumours of this kinds of things happening over the last 11 months. Remember Chapman and Shartz's "bank run" prediction for November that never materialized?

I believe that something will happen in Greece but not for a while.  it will be a back and forth tug of war until they are either saved or until they default. Either way, it doesn't look as thow the equity markets care.

Al Huxley's picture

Have a look at the SPX chart for 1-Jan-2007 - 14-May-2007.  Then push it out a couple of months.  Media and the indexes pretend everything's great, against alot of contrary evidence, but the internals are starting to betray the dubious nature of this 'neverending rally'.  I'm thinking a couple more weeks until reality starts to intrude on the party.

Zro's picture

I donated after reading this article. Not to boast or anything, but I merely wanted to point out that I would happily pay for news content that is worth my money and I can't get elsewhere. Succeeded on both!


Thanks Tyler


PS: x minus (minus six) equals minus seven .. lol

i.knoknot's picture

"PS: x minus (minus six) equals minus seven .. lol"

hell, with that as a metric, i'm not sure i'm qualified to be in here...

(good on you for donating)

zero intelligence's picture

It's not the 11 days that's important. Greece can't pay the principal on the 10yr GGB unless it issues new 10yr GGBs.


No can do.

Al Huxley's picture

Can't even realistically float some short-term debt to buy time anymore.  Looks pretty grim to me - Leo, how are they getting out of this one?

What_Me_Worry's picture

Because they used the money from the bonds to buy Chinese solars.  The same Chinese solars that depend on countries like Spain and Italy for a bulk of their sales.  Spain and Italy are in great financial shape, I am certain nothing will happen to them that is happening to Greece right now.

Al Huxley's picture

Then everything will work out just fine!  Thanks, I'm glad I can relax now.

omi's picture

We've seen it many many times. Just an attempt to push yields higher, further making funding via rolling of debt more difficult.

Mr.Kowalski's picture

There is a meeting going on now at the ECB on how to help Greece. If all it produces is hot air, and if yesterday's news about the repo market abandoning them is true, Greece will not be able to borrow money; to even attempt a bond auction is too risky. The IMF can only provide about $15 billion, enough to get them perhaps thru the middle of summer. But unless something more substancial is done in addition to the IMF (ie creditors agree to take nice haircuts), the end result will be default by the end of summer.

Adam Neira's picture

There are other deliberations going on as well. Some public. Some private. The Greek intellectual elite think they know what is going on, but they don't have as many pieces of the jigsaw puzzle as others. All the pieces are now falling into place. Each nation will need to work out how to position itself in the bigger picture.

Jake3463's picture

This happens the next question is what are the consequences.  Which banks are holding other Greek debt and how much.

If dominoes are set to fall what are the order.

The question after that is who was the buyer?  The only institution I know that takes banker assets that are distressed and buys them without a large discount is the US Treasury and Federal Reserve.

Augustus's picture

I thought the ECB was taking them on some sort of repo basis.  Isn't that actually the source of the cash for the banks that need to let the depositors move their cash.

carbonmutant's picture

It looks like Greece is planing to do something next week that increases the risk of holding 10yr bonds... either that or they're about to get a downgrade from somebody.

Mr Lennon Hendrix's picture


Makes sense....they love that date.

Damn this manipulation makes me upset.

boricuadigm-shift's picture

"April 20 (4/20 in U.S. date notation) has evolved into a counterculture holiday, where people gather to celebrate and consume cannabis. The term originated from a group of teenagers at San Rafael High School in San Rafael, California, United States in 1971.[3][4]Louis Pasteur The teens would meet after school at 4:20 p.m. to smoke marijuana at the statue"

Pass it on!!


ZerOhead's picture

Looks like this little PIIIGSie is going to market...

(With a brief stop at the slaughterhouse first!)

ZerOhead's picture

Iranians... get with the program!

Arthur Two Sheds Jackson's picture

Nah...Too busy with the slo-mo Saigon in Iraq.



hamurobby's picture

Iran secretly tells Saudi to quit taking frns for oil, or "boom" news at 11.

A guy needs to pull some bucks to buy a new Ferarri and the world panics.


redguard's picture

Pushing the victim over the edge?

Augustus's picture

It seems that the drama will continue.  The Bundesbank has told Merkel that it is a threat to German stability and maybe illegal.

Ambrose Evans-Pritchard


Hans Redeker, currency chief at BNP Paribas, said the report greatly strengthens the hand of EMU critics in Germany. A group of professors is already itching to file a complaint at the constitutional court to block the Greek rescue. "This reduces Merkel's room for manoeuvre to zero," he said.

The Bundesbank, headed by ultra-hawk Axel Weber, said the decision to bring in the IMF makes matters worse, arguing that the EU would impose tougher budgetary discipline.

The report mocked the IMF as the "Inflation Maximising Fund", saying the body had gone soft under Dominique Strauss-Kahn, a French socialist and Keynesian. It has shifted focus from fiscal cleansing to "growth-oriented" financial policies. "Currency reserves from the Bundesbank cannot plausibly be made available for such purposes," it said.

Bow Tie's picture

in a normal world one could speculate that...perhaps the seller came to their senses and realised these particular bonds are probably not the wisest investment :D

buzzsaw99's picture

I'd be more inclined to believe this is an attempt to incite panic due to nefarious motives. No big bank has anything to fear with ZimBen at the usafedres.

Augustus's picture

Looking a little more at the article from the Telegraph, there are a couple of interesting points.

First, the ECB evidently has taken on a bunch of the Greek debt with only modest discounts through repos.  The longer it keeps going, they will end up with all of it.

Second, all of the large EU countries have just tossed bilions to keep their banks from going under.  What would the marks be on a 4% Greek bond in an 8% market for them.  They have been all a twitter about having honest marks, honest hedge funds, etc.  Well, now it will be the ECB that is chock full of this stuff that will be worth 60 and they are allowing to be repoed at 98 or so.  The whole bunch will be double screwed as the Greek banks have to be sending the ECB everything they can find a number for.

Moneygrove's picture

Iranians = saudis !!!!! same thing !!!!! ask the people that worked in the trade centers !!!!!!!!!!!!! saudis very mean to americans !!!!!!!!!!!!

buzzsaw99's picture

Who's the retard that flagged my last post as junk?


Save that crap for the spambots asshole!



aus_punter's picture


Buck Johnson's picture

For someone to take out 8.2 billion Euros 11 days before they mature tells me also that they think either they will default and/or they will default technically and try to get the bond holders to adjust their percentages.  If Greece defaults it will be the larger than Argentina and Russia default put together.  That 45 billion if they get it will only get them through the summer (as long as they don't find more rabbits lurking in t he bushes).  And if they agree to the austerity plans how will they get the money to service the debt which is close to 300 billion dollars total, for a nation of 11 million people.

aus_punter's picture

who says anybody sold 8.2bn Euros ? That is the size of the issue - it is trading at 99.9 - bonds mature at 100

Clark Griswold's picture

So...I have read about European bank exposure to Greece, dominoes, PIIGS, etc.  And I am new please heckle...but what ARE the ramifications of a Greek default?  I mean...the market has it priced, we all expect it...I am prone to believing the results would be problematic if the DIDN'T default.

Ned Zeppelin's picture

truth is no one really knows.  Greece debt is a tiny fraction of Eurozone debt. By itself, it would be worthy of a shrug.  the question is, is this a single event, or first in a multiple event sequence that has the bond vigilantes moving to their next target, and from that point on, it may generate its own momentum - think dominos. How far apart are they? too far and one falling does nothing. Close together, and they all go down if any one goes down.