Eagerly Awaiting That Jefferies CUSIP-Level European Exposure Update

Tyler Durden's picture

Update: Here is the full two page list

Yesterday, when Jefferies CEO Richie Handler issued his 3rd, and probably not last, public promise that "the firm is fine", he also promised to release granular level detail of every single European holding it has via a complete CUSIP dump. To wit: "These are fragile times in the financial market and we decided the only way to conclusively dispel rumors, misinformation and misplaced concerns is with unprecedented transparency about internal information that is rarely, if ever, publicly disclosed,“ said Richard Handler, Chairman and CEO of Jefferies. “Later today, after the markets are closed in Europe and we have completed our inventory control accounting, we will post on our web-site our day-end, CUSIP-level holdings in the securities of these countries. We care for our clients, shareholders, bondholders and employees and want to allay any concern that may have arisen. As was the case yesterday, the facts about our sovereign debt exposure and other matters are straightforward and easily understood. We encourage all market participants and interested parties to review our public filings that contain extensive disclosure of the nature, extent and financing of our assets. Our firm stands on a solid foundation of over $8.5 billion of long-term capital and we look forward to continued success." This was yesterday. Now, we can only assume we simply are unable to navigate the company's news release section quite efficiently, because it is now tomorrow, and all those clients, shareholders, bondholders and employees of the firm are quite curious just why the firm still has not released what it has promised. Just as they are curious why the firm's public net European exposure fluctuates materially in 48 hours.

We can only attribute the delay to the firm's posting of actual transaction dates for all the CUSIPs because otherwise it sure would smell very, very fishy if the firm shorted billions in European bonds this week only to make it seem that it was hedged. And even if it had done the shorting previously, one wonders: why have a matching short cash bond for every long? Because last time we checked, risk, which if right translates into profit, means taking one side of the bet. Why Jefferies would use up enough of its balance sheet to amount to 77% of its stockholders' equity for a trade that is nothing but a wash, in Jefferies' words, is something we urge clients, shareholders, bondholders and employees to think long and hard on...



So here is the Jefferies CUSIP update with the full list: a completely de minimis update which unfortunately as expected tells us nothing of position inception, has any CDS detail level (we'll take your word that 1 year CDS matches 5 year), or, most importantly, has any exposure on counterparties.

BusinessWeek shares more:

One concern that was not addressed was the identity of the counterparties on Jefferies' short positions, said Sean Egan, managing director of Egan-Jones Ratings Co., which on Thursday cut its ratings on Jefferies debt in a move that helped fuel an early selloff of the stock. "If it's a third-tier bank, then you have to question whether or not the bank will be able to fulfill its obligations in the event the peripheral countries in the EU continue to slide."


"They may prefer not to disclose that, and so be it, but that's a comfort that investors need to properly view an entity like the Jefferies Group," Egan said in an interview.


There's also the larger question of how much debt Jefferies is carrying. Egan said the main reason for the downgrade was his firm's view that Jefferies is over-leveraged. While acknowledging the debt is not has high as MF Global's, or the levels that failed competitors Bear Stearns and Lehman Brothers carried before they collapsed in 2008, he said it is still a concern.


Egan-Jones is so far alone among ratings companies on this issue. Larger agencies have not issued opinions in recent days on Jefferies' debt.

Full "list" - the first to figure out which CUSIPs are short, and when they were put on, gets a free Zero Hedge hat.


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HoofHearted's picture

Really, baby, I truly love you..and I'll pull out before I cum too.

max2205's picture

There a phoney Fed Repo or a phoney CDS which makes it LOOK like a wash position. Who ya fooling JEF. And quit naked shorting my stocks FUCKTARDS

High Plains Drifter's picture

sounds to me like they are in big trouble....

bdc63's picture

Really, Jefferies? -- make promises on something like this and then don't follow through?  So your plan all along was just to make it through market close on Friday (geez, I hope you got the word out to all your buddies to sell between 3:30pm and 4:00pm - it would be a shame to think any of them got hurt by this)?

I guess Monday you'll figure something else out to announce at 3:30pm to rally your stock.  It will be interesting to see how long you can keep this game going - and you better make it REALLY GOOD this time, 'cause the sharks smell blood in the water.

Alea Iactaest's picture

How far we've come in a week. I'd take a bet that on Monday they'll pull an MF Global. SSDD.

Alea Iactaest's picture

And in case you missed it, it's nice to know that at MF Global: ‘We Have Convictions’

Schmuck Raker's picture

Who ya gonna believe? Jefferies?

Or Tyler Egan Durden-Jones, Esq.?

Eireann go Brach's picture

Timmay won't answer his phone as "Dick Handler" does not want to "drop the ball" on what he releases without the Tax Cheats blessing!

infinity8's picture

signed "Peregrine Broadbent" - where the fuck do these people come from?

Schmuck Raker's picture

That isn't what we're looking for.

Tyler had that up with yesterday post  Here.

Cult_of_Reason's picture

I wonder how many warning signs the bullish equities herd needs to abandon their end-of-the-year Santa Claus rally hopes?

1. Dexia failed.
2. MF Global failed.
3. Jefferies is a dead man walking.
4. Greece is teetering on the brink.
5. Italy 10-year bonds yield is 6.4% -- approaching the endgame.
6. CME is forced to raise margin requirements on "all products" secondary to liquidity squeeze.
7. No QE3 money printing from the Fed.
8. Etc.

trampstamp's picture

Let's not forget Mr. Bernanke said we will see financial instability for the next couple of years and to trade at your own risk.

bdc63's picture

You're right Cult_of_Reason.  We are near the tipping point ... just a couple of black swans away.  Jefferies failing, a couple of Whitney's muni failures coming to fruition, and talk of an Italian haircut should do the trick.

HD's picture

Are you kidding? Perma bulls are still high on hopium because they have been held up and bailed out for three years come rain or shine. Much of the street has forgotten what moral hazard really is. They feel entitled to zirp, QE and intervention galore - all while pissing on the OWS.

Reality when it FINALLY hits - will be brutal to those in a Fed induced hopium haze.

Buck Johnson's picture

Your spot on.  Also Jeffries wouldn't be doing this unless someone who outed them in that rumor knew they where in trouble.  And all they are doing is trying to obfuscate that they aren't.  I bet anything that something about Jeffries will come out on Sunday, because with this many protests and issues from the company they are panicking.  Somebody or bodies put that rumor out and if they did that what else will they put out about Jeffries.

El Gordo's picture

The dog ate the list.

Miss Expectations's picture


Every formula cell?  How is that possible?

FIX IT!  Zero Hedge has us on death watch!  One more headline and we're toast.

Threeggg's picture

Don't worry the Benny-n-jets printer will have er' fixed up in a jiffy

ziggy59's picture

Check JPM for the list.. It will probably show up there too..

ThirdCoastSurfer's picture

 "last time we checked, ....profit, means taking one side of the bet."

Thank you ZH. In this world of sanity, how else could I confirm my insanity if not to find a kindred logic.  To be net-net zero means the bills go unopened and the salaries go unpaid, but to JEF (& almost everyone else), it means solvency because of something called unlimited debt. 

Biggvs's picture

So Jefferies is net SHORT the Italians?

DV01 +36k in Italian debt, plus DV01 -42k in futures (see note at top of page) = -6k DV01 in Italy?

slewie the pi-rat's picture

"Why Jefferies would use up enough of its balance sheet to amount to 77% of its stockholders' equity for a trade that is nothing but a wash, in Jefferies' words, is something we urge clients, shareholders, bondholders and employees to think long and hard on..."

slewie has frequent long, hard thoughts, and likes contests, too!

- the first to figure out which CUSIPs are short, and when they were put on, gets a free Zero Hedge hat.

the answer is definitely maybe, so send it to slewie!  yay!  new hat, BiCheZ!

luna_man's picture

I'm thinkin...I just know..."Zero Hedge" hat, would look good on me!


If, Tyler couldn't figure it out...I'm gonna have to dig deep and buy one!...Do they come in xxxlg?

prodigious_idea's picture

For disclosure, I trade equity options, almost exclusively.  Lately I've been focusing on the banks and traded JEF options last week.  A rookie question (that I should know the answer to) for any of you sophsticated posters:  Does short interest ONLY include stock sold short - not equity options.  In other words, is there a metric that includes short stock PLUS Long Put positions and Short Call positions?  Thanks in advance for replies.

NOTW777's picture

in this upside down world, isn't it bad to be short euro sovereign debt?  cant the euro powers that be just give out haircuts at will?  do cds even mean anything?

one could be right and still lose

Dr. Nancy's picture

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Dr. Nancy

slewie the pi-rat's picture

please join me in junking this ^ shitheaded fuking troll

MarcusLCrassus's picture

>taking financial advice from a guy named "dick handler"


DollarDive's picture

So..... who's the counterparty on the short positions ?