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So Much For That Greek Containment: CDS, Bund Spread Back At Record Wides
Remember how that "massively" oversubscribed Greek bond deal (at HY spreads) was supposed to bring peace and prosperity to the gyro makers? Well, oops... Today, the spread between Greek 10 Years and Bunds just hit a record wide of 406 bps, as CDS also hit another all time wide at 370 bps. The chart below shows how Bund spread has moved over time: basically the funding problem in Greece just got worse despite of the bond sale, and now the Greek finance ministry has entered desperation mode.
Just how desperate? The latest development which is precipitating this move (which of course involved Goldman Sachs), is the rumor that Greece has hired GS to sell €25 billion of Greek bonds to... Beijing. Welcome to the new lender of last resort: China has just become the world's Federal Reserve. Although we shall see just how successful this is. And, as expected, Greece vehemently denies anything is happening: "We categorically deny that there is any direct or indirect agreement between the Greek government and Chinese or other investment funds to purchase debt, Greek bonds or Greek assets," the finance ministry said in a statement. "Likewise, we categorically deny that any mandate has been given to an investment bank to negotiate these issued on behalf of the Greek government," the statement added. So yes, this basically proves that Goldman is in active negotiations, vying for a place on the right hand side of the Chinese Bernanke replacement.
Of course, local color is always much appreciated, especially for the humor content. Reports Dow Jones:
"All this widening in the spreads is baloney," said a trader at a Greek bank. "The market is just trying to find an excuse to push the spread wider." He added that news that Greece was planning a new 10-year bond issue in the next two to four weeks, had also led to selling pressure on the 10-year Greek government bond.
Yes, markets just try to find an excuse to push spreads wider when the trend over the past 9 months has been one long painful grind tighter. Better luck next time Greek bank trader.
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buy the breakouts!@
Waiter, there's a panda in my avgolemono....
Just imagin what happens if China sells $30b to buy euros to give it Greece, CASCADES of dollar sales will hit and that only means one thing: GOLD BITCHES!!!
OR, they use their fairly decently sized EUR reserves to buy this because they cant afford for the dollar to hit a crisis.
How is in Egypt - are you in denial? (rim shot)
What you and every other gold bug should be seeing today, like every other day, is that gold is 100% correlated with risk assets. Equities down. Gold down.
So yes, this basically proves that Goldman is in active negotiations, vying for a place on the right hand side of the Chinese Bernanke replacement. online high school diploma | online ged | online degrees
Why havent other PIIGS CDS's followed the Greek trajectory?
they have. the PII-S ex G are all wider 11-17 points today. Greece is wider by 42 or so.
but that doesnt make sense. Spain is definitely just as fucked as Greece, except its bigger so it will be harder to put it together. It should be getting crushed. But I guess the world can only handle 1 economic meltdown at a time?
These quote are not over Bund. Reference rate.
Entity Change (bps) CPD (%)
Portugal +8.25 11.54
Spain +6.29 9.77
Italy +5.53 9.28
Greece +17.02 25.26
The positive comments and do well wishes are very motivational and greatly appreciated.
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Does anybody know the ISIN for the oversubscribed Greek bond? Or any ideas where I can find it?
Thanks!
Just like the old saying... after shaking hands with a Greek banker, be sure to count your fingers afteward, just to be sure.
goldmans not an investment bank they are a bank holding company so they are not lieing.
"peace and prosperity to the gyro makers?"
Hey Tyler, WTF is up with these stupid comments? And as far as Chinese helping Greeks out, smart move as China and Greece should work together on other fronts as well (shipping, ports, solar farms in Greece, etc.). All of you waiting for Greece to crumble should read some basic history. You are all out to lunch here, as usual.
I thought the gyro comment was rather funny. Loosen up a little and keep buying those dips!!
I am buyng the dips but find these ethnic comments are just dumb. Comments like these turn me off.
What are you talking about? Modern Greece is younger than America, frequently plagued by poor financial management and corruption. Quite frankly, once it came to light that the Greeks manipulated their statistics to join the EU the Germans should have sacked up and expelled them back into the Balkans where they belong. But then again, this is the same EU that let in Romania in so there is that.
Hey they accepted us too - Bulgarians :)
All empires crumbles just after they include/conquer us...
greece cds 380 wide print, not 370 - rookie!
Banks got these 5yr bonds at 99.33 yesterday. Today speculators were selling their bonds at 98.10. At the same time the banking stocks plunged 5,76%. Speculators have already massive short selling positions in banks. The game to short the greek market is easy selling bonds...
Why wouldn't they use USD? Couldn't this be a stealth way to lower the EUR/USD imbalance that is supposedly killing Euro-zone exports?
Great info.! Substantially, the article is really the best on this laudable topic.
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