Devastation In Adjusted Euro-Sovereign Basis Trade Resumes: Generali And Allianz CDS Update

Tyler Durden's picture

Continuing our coverage of our favorite European implosion derivative trade for entities which, unlike countries, are not too big to fail, namely Italian and German mega insurers loaded to the gills with Italian and other Euro sovereign debt, Generali (ASSGEN) and Pimco parent Allianz (ALZ), we find that their CDS continue to implode (or soar as the case may be), more or less as expected. We anticipate that more and more traders will proceed to switch basis trade hedges not with sovereigns (where the CDS is now clearly defunct) but with sovereign derivatives such as insurers which can certainly fail (at least for the time being). In the meantime, below is a refresh on how ASSGEN and ALZ has done since we suggested buying protection in the two companies.



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Carlyle Groupie's picture

When the Italian Villas burn to the ground the insurers will not be able to cover the losses.

Hint, hint

Use of Weapons's picture



Paid troll - blocking in effect.

bnbdnb's picture

What is the true TSHTF breaking point on these cds?

Carlyle Groupie's picture

Not what but when. When payments are missed/default on.

Iam_Silverman's picture

Actually, you are only almost right.  The truth is when the IASD says a credit event has occurred.  So, the answer is - never.

Carlyle Groupie's picture

But if he plays it from the Corporate bond angle he is then correct, so my answer had many assumptions. My apologies.

Iam_Silverman's picture

"But if he plays it from the Corporate bond angle he is then correct"

Not always true either.  Google EFH Bond + CDS and see what comes up.  They essentially restructured their bonds they couldn't pay, and the IASD gave them a pass too!  I know, EFH is the parent corporation for my employer.


See this link:

Sudden Debt's picture

A perfect representation of the European situation:


Maxwell Smart's picture

Use the link below, not the one above. :D

Tell me lies's picture

My favorite episode of all time. Any time I need a good laugh, I watch again on YT.

"Good day sir"   "how much did you pay for the cheap mustache"   "clean yourself up" LOL!

bill1102inf's picture

Give us all a break already.  Just from todays ZH headlines you would think the world ended last night.  Instead, ES is down a whopping .72% and gold is off another ten bucks or so or .5 %.  


Futures Plunge As Fed Di


Sterilized Interventions


Swiss (Black) Loch Ness Monster


Devastation Contagion Deepens Non-Intervention Belgium Bad Economic News Phase Shift" Debt DS Now Triple-Digit Offered  A-98 Gasoline On The European Fire Contagion Shakes The Euro Core From Bad To Worse As Europe Opens
Ethics Gradient's picture

If you want boring headlines and a micro outlook, may I cordially suggest MSM?

LawsofPhysics's picture

If you are really holding this paper, get paid while you can.  Like everything else in life, timing is everything.

Caviar Emptor's picture

We're witnessing the end of days for the EZ. They've gone beyond the point where the firemen can just hose the fire. The house will either burn down or be seriously damaged. Credibility is a huge issue which has now been burnt. But don't worry, the global economy will go down with it

Franken_Stein's picture

Yeah and funnily these CDS were invented in 1994 by Blythe Masters, a City cunt, working for JPMorgan every now and then.

But I do not expect from Tyler and likes to be smart enough to wrap their minds around that concept of a plan that spans longer than your average election cycle, let alone 250 years.

Those dimensions are unfathomable for Americans, but not for us.


Nonetheless, I try it for the 376th time: This "crisis" is intended, it is planned, it is wanted.


I mean we tried to warn you Americans, but you were asleep at the wheel for the last 30 years, living in your capitalist bubble of "The American Dream".

This video is from 1992 by Dr. John Coleman, touring the U.S.:

Dr. No's picture

 Finally those capitalist pigs will pay for their crimes, eh? Eh comrades? Eh?

JSD's picture

Merkel will break. Germany "owns" most of the EU's junk thanks to years of EUR manipulation to feed an export giant that was never there pre-EUR.

Watson's picture

Not if she wants to remain in charge of Germany - and her party has been losing elections anyway.

export giant that was never there pre-EUR
Really? Germany's post war recovery was based on the manufacture and export of high-quality goods, all over the world, and was very successful indeed despite an always strong DEM.

The only thing Merkel might do is to restore the DEM. It would be very popular, and although it would produce higher export prices people buy German goods on quality, not price (see success despite strong DEM above).

JSD's picture

Germany's economy (whether they realize it or not) would take a(nother) massive hit (read: labor shock) if Germany were to re-institute the DEM. How do you think that would fly with the voting public?

I should have quilified 'giant' and 'never': 'giant' in the China/Japan sense of the word, and 'never' (admittadly exaggerated on my part) as in the mid-80's and 90's.

Additinally, Merkel adopts the DEM, she (and the Bundesbank) will have to explain to the German people why they now have to take a massive write-down on their savings thanks to years of currency manipulation (good luck in the re-elections).

I'm not saying it's NOT the right thing to do, but in what univers is doing the right thing at the top of any political agenda? 

Dr. No's picture

When people talk about "too big to fail" they are really saying the "tax payer should back stop my bad bets".  When I saw cramarica chair the prez debate, he passionatly stated "italy is too big to fail" as if it was end of discussion.  I thought about this as a peasant in America and it remidend me how they are desperatly they are trying to maintain their wealth.  I wish they would state the truth "They are too big to fail cuz I will loose my @ss if they go down and I dont want to have a transfer of of my welath to the more prudent investors".  No matter what happens at the next bond auction, the sun will come up tomorrow and billions of people will need to feed, house, and cloth themselves; with or without CDSs.

slewie the pi-rat's picture

heluva call, tyler!

will pimpCo need re-parenting?

Iam_Silverman's picture

"pimpCo need re-parenting"

I thought they were adopted.

Snakeeyes's picture

German and Belgian 5 yr CDS are increasing as well. Euro endgame coming!

Belgium Dexia Debt Woes, Germany's Debt Issuance Debacle - Obama Spares Two Turkeys (NOT Belgium and Germany)

Desert Irish's picture

Time for the Tylers to revist Blackrock and see how Mr Fink is faring with those "solid" Italian bonds.

navy62802's picture

I can't believe anyone is actually surprised that the European bond market is collapsing. After the Greece scam, smart people would, should and are running for the exit.