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Greek 1 Year Hits 763%

Submitted by Tyler Durden on 02/22/2012 09:21 -0400

If it seems like it was only 5 days ago that Greek bonds could be had for the blockbuster yield of 638%, it is because it was As of today, the same bond was yielding an even more ridiculous 763% (and remember when the MSM fluffers were telling you to buy these at the bargain basement yield of 100% in September 2011?). This price has nothing to do with the Fitch action on the country which is irrelevant, and all to do with the fact that, as noted previously, the cash coupon on the post-reorg bonds was cut once again, this time from 3.6% to just 2%, and the current price on non UK-law bonds is merely indicative of the cash on cash return investors in these bonds expect to make. It also means that the market expects a redefault in just about 1 year. And yes, we realize that at bond prices in the high teens, the yield curve is absolutely meaningless but it is still highly entertaining to watch as Greek bond yields are about to hit quadruple digits, which in itself is very indicative of the recoveries one can expect in a global sovereign ponzi, and yet the powers that be tell us this is a perfectly normal phenomenon, i.e., there is no default, and thus there is no reason to hedge for it. Alas, the whole world has gone mad.

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Wed, 02/22/2012 - 09:23 | 2184262 slaughterer

Now is the time buy the GGGB 1YR! I feel sorry for all those suckers who bought last week when the yield was a mere 638%. /sarc.

Wed, 02/22/2012 - 09:28 | 2184279 GetZeeGold

Heh heh.........BOOM........winning!!!!

Wed, 02/22/2012 - 09:32 | 2184292 Buckaroo Banzai

And it hasn't even gone parabolic yet.

Wed, 02/22/2012 - 09:32 | 2184293 WonderDawg

Good thing they finally concluded the bailout deal on Tuesday, no telling what the yield would be today without it.

Harharhar

Wed, 02/22/2012 - 10:53 | 2184692 fockewulf190

Anyone wanna bet if the 1 year hits 1000% the Bundestag votes no?

Wed, 02/22/2012 - 10:05 | 2184409 theMAXILOPEZpsycho

Keeping my powder dry for 1000%

Then I'll be all in on Greece, with my coffee shop due to open next month as well

The time to buy is when there's blood on the streets

Wed, 02/22/2012 - 10:48 | 2184654 CClarity

Zimbabwe.

Wed, 02/22/2012 - 10:06 | 2184413 silverbullion

I feel sorry for the fiat paper suckers... a dirty, dirty habit I tell you.

Wed, 02/22/2012 - 10:31 | 2184575 BW

Price propaganda. They are going to print.

Wed, 02/22/2012 - 09:23 | 2184263 Fips_OnTheSpot

4-digit is the new normal

Wed, 02/22/2012 - 09:24 | 2184267 battle axe

And you get a free goat with every bond.....

Wed, 02/22/2012 - 09:42 | 2184287 bpom

And you get a free goat with every bond.....or a barbecued kid on a stick.

Wed, 02/22/2012 - 09:31 | 2184289 GetZeeGold

That and a 1/20 time share on the Acropolis.

Wed, 02/22/2012 - 09:51 | 2184356 bdc63

Hmm ... goat ... 1/20th time share ... throw in all the baklava I can eat and I'm IN!

Wed, 02/22/2012 - 09:24 | 2184268 Kaiser Sousa

763% sounds like a bargain...

sign me up.....

for fucks sake man..........when r these poor bastards gonna murder their bitch made banker owned politicians???????????

Wed, 02/22/2012 - 09:31 | 2184288 Ratscam

when they have to offer their 111 tons of gold, agreed under UK law in luxembourg jurisdiction, in exchange for the soon to fail 2012 paper bail out money.

Wed, 02/22/2012 - 10:09 | 2184428 flacon

Yikes. That news escaped me. I"ll have to go look it up.

Wed, 02/22/2012 - 10:23 | 2184522 Kaiser Sousa

"But down there in the small print of the Greek deal lies the nasty side for Greece. There lies a heavy penalty clause; Greece's lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal. Greece has 111 tonnes of gold. In other words Greece has given up on its "money in extremis", gold. If they default they will have nowhere else to go. Its international assets will be seized and it will not be able to trade internationally at all."

http://goldsilver.com/news/another-phase-in-the-greek-tragedy-it-could-l...

Wed, 02/22/2012 - 11:12 | 2184773 thecoloredsky

Wasn't that reported last year?

http://www.zerohedge.com/article/european-gold-confiscation-sceme-unfolds-european-parliament-approves-use-gold-collateral

Wed, 02/22/2012 - 14:53 | 2185711 Matt

How much gold to you get?

If you buy these 700+ percent one year bonds, they get swaped out for 2 percent notes, but then when those fail, you get gold, right? how much gold for how many euros?

Wed, 02/22/2012 - 09:24 | 2184269 Irish66

Viagra

Wed, 02/22/2012 - 09:38 | 2184271 LawsofPhysics

An offer we can't refuse? This is absurd, when will U.S. bonds have this kind of yield?

Wed, 02/22/2012 - 09:27 | 2184272 GeneMarchbanks

March should basically dictate the market until summer. Supernova or 2008 Redux?

Wed, 02/22/2012 - 09:28 | 2184273 tim73

763 percent profit! Now we are talking! Better call my Nigerian contact, their offer sucks now.

Wed, 02/22/2012 - 09:28 | 2184275 PaperBear

Why is this financial instrument having its price move if there isn't anyone buying or selling it ?

Wed, 02/22/2012 - 09:28 | 2184276 disabledvet

This is not madness. Madness is German yields this low relative to all the others. Talk about a PREMIUM. Remember ...the goal in the USA has always been to "get banks lending again." you could have 100 billion euro's in your bank and still be insolvent...as all the Greek banks have discovered!

Wed, 02/22/2012 - 09:56 | 2184378 Lucius Corneliu...

If you think it is madness then why not short them?

Wed, 02/22/2012 - 09:29 | 2184285 marcusfenix

beware the PIIGS of march...

Wed, 02/22/2012 - 09:32 | 2184291 lolmao500

Fitch saying the exchange of bonds is DEFAULT.

Wed, 02/22/2012 - 09:37 | 2184315 LawsofPhysics

I saw that. If this is really the case then pull the fucking CDS trigger already.

Wed, 02/22/2012 - 09:54 | 2184371 bdc63

no can do ... it's not a default until the bankers that wrote the CDSs say it's a default ... and that'll happen about week after Newt's biodome community on the moon is operational ...

Wed, 02/22/2012 - 09:58 | 2184388 LawsofPhysics

Yep, precisely why I placed my money on the devils we know and commodities at the begining of the year. Some things never change. It has paid off so far and will re-adjust in March. Dare I say, same as it ever was.

Wed, 02/22/2012 - 09:32 | 2184295 rsnoble

Make up rules on the fly. The worse things get the more bs they will come up with. I'm sure of it. Last but not least could be "we need your gold now".

Wed, 02/22/2012 - 09:33 | 2184296 JPM Hater001

Im In.

Wed, 02/22/2012 - 09:33 | 2184298 konputa

After Greece defaults there will only be PIIS

Wed, 02/22/2012 - 10:05 | 2184411 bpom

It seems right to rebalance the acronym by adding in Senegal, Slovakia, or Slovenia.

Wed, 02/22/2012 - 09:35 | 2184303 Dick Darlington

Feb. 22 (Bloomberg) -- Cypriot banks will suffer the
second-highest losses from the haircut on Greek debt after
Greece’s own lenders, state radio CyBC reported today, citing
economist George Charalambous.
The losses for the Cypriot banks, which hold 5 billion
euros ($6.6 billion) in Greek government securities, are
equivalent to 20 percent of Cyprus’s economy, Nicosia-based CyBC
said, citing Charalambous. He served as chairman of the
Securities and Exchange Commission from 2006 to 2011.

Wed, 02/22/2012 - 09:35 | 2184305 Alex Kintner

My "Buying Bonds 101" book does not have a chapter on 3 digit rates. Things are truly Different This Time. I'm all in. Retirement here I come.

Wed, 02/22/2012 - 09:35 | 2184306 FrozenOut

Are there yield numbers that will crash established data systems?

Wed, 02/22/2012 - 09:35 | 2184308 FrozenOut

Are there yield numbers that will crash established data systems?

Wed, 02/22/2012 - 09:35 | 2184309 Ponzi Unit

Cognitive dissonance, anyone?

So, Greek debt is now an 8-bagger and default is officially off the table. You don't need a weatherman to know which way the wind blows.

We are way down the rabbit hole, still falling... still gaining speed...

Wed, 02/22/2012 - 09:36 | 2184313 tim73

So they are playing with a bond instrument that has no relation to real world!? Sweet, just put a symbol into a bourse and start playing! Real companies are so last century.

Wed, 02/22/2012 - 09:38 | 2184320 HurricaneSeason

Is the interest on those bonds taxable and what is the minimum purchase amount? I can't finf it on Ameritrade.

Wed, 02/22/2012 - 09:38 | 2184323 Olympia

World War III - The First Private War in History

Those who won all battles shall lose the war.

Bilderberg Group and the crimes against humanity.

This is how things work in all countries. Whatever used to belong to their people, today it belongs to the multinational companies of the Club. People were betrayed by their given leaderships and they lost everything. Capitals and markets were handed to the Club bosses. If you understand what is going on in Greece, you can understand what is going on in Britain, France, and Germany etc..

http://eamb-ydrohoos.blogspot.com/2012/02/world-war-iii.html

Wed, 02/22/2012 - 09:38 | 2184324 Sandmann

I don't understand yields of 763%......could you explain them as Odds instead ?

Wed, 02/22/2012 - 09:41 | 2184335 Temporalist

Sure. The odds of Greece paying back their debt is 0%.

Wed, 02/22/2012 - 09:45 | 2184346 Alex Kintner

Forget the interest. It's 763 to 1 odds that you'll even get your principal back.

That's the way I read it anyway.

Wed, 02/22/2012 - 10:01 | 2184397 Temporalist

Whoops I didn't do the proper odds notation. The odds of Greece paying back their debt is 1:fucking never.

Wed, 02/22/2012 - 13:44 | 2185401 Willzyx

If par is $100, maturity is 1 year, payment is $2, and the stated interest rate is 763%, a financial calculator says the present value of a Greek 1 year bond is $13.35 (down from $100).

The coupon is the easy part. A $2 coupon on a $13.35 bond represents a return of about 15%. The remaining 748% return comes from the assumption that Greece will pay back the full par value of $100 at maturity a year from now, on a bond purchased for $13.35. We all know that won't happen.

Wed, 02/22/2012 - 09:41 | 2184332 Temporalist

I saw that BDI has dropped to 700.

Wed, 02/22/2012 - 09:56 | 2184380 GeneMarchbanks

Bottom bouncing has begun. Settle in, it'll be a while.

Wed, 02/22/2012 - 09:42 | 2184338 tarsubil

Perfectly sustainable.

Wed, 02/22/2012 - 09:47 | 2184350 whoopsing

Gettin close to escape velocity

Wed, 02/22/2012 - 09:51 | 2184359 forexer

The new pricing model based on teseracts.

Wed, 02/22/2012 - 09:52 | 2184361 Tom Green Swedish

They aren't bonds anymore, they're donations. 700 percent yield is like a payday loan times 2. They seriously got hit by an idiot earthquake. Maybe Sean Penn can head over there and save them.

Wed, 02/22/2012 - 09:53 | 2184365 Moneyswirth

Finally, I can rotate my cash from ZNGA and AAPL into Greek government bonds at 763%.

In the words of the great Homer Simpson, everyone's stupid except me...

Wed, 02/22/2012 - 09:54 | 2184375 MFL8240

Hope Bernanke takes advantage of this bargaian. He is good at buying junk!

Wed, 02/22/2012 - 09:58 | 2184385 Stylianos Kyriacou

If a book named "the making of a fly" can worth $23,700,000.00 then everything is possible after all as my grandpa used to say "never underestimate stupid people in large numbers"

http://www.youtube.com/watch?v=TDaFwnOiKVE (@ 7:00)

Wed, 02/22/2012 - 10:15 | 2184453 bpom

When is the last time Greece had a auction of debt? I mean debt auction.

Wed, 02/22/2012 - 10:13 | 2184456 bania

definition of "return free risk"

Wed, 02/22/2012 - 10:16 | 2184467 FreeNewEnergy

I am perfectly willing to loan money to ordinary Greeks at the absurdly low rate of just 300%. I work for the mob. We run a clean business. Just ask my cousin Vito, yeah, the one with the crooked nose.

Wed, 02/22/2012 - 10:50 | 2184670 tim73

You do not! Us Albanians run the cleaner businesses, you dumbfuck. You Italians better concentrate in making lousy, no tomato crappy pizzas in NYC or ELSE! And we offer 250.

Wed, 02/22/2012 - 11:13 | 2184777 Stylianos Kyriacou

RESPECT my brother!!!! hehehe

Wed, 02/22/2012 - 10:50 | 2184667 Die Weiße Rose

Blankfein is still waiting patiently for his " 53.5% Greek Haircut "

he was last seen standing outside a Greek barber shop wearing a 1970 style Super-Jumbo Afro-Wig

"I want my " 53.5% Greek Afro Haircut " Now !" Blankfein shouted, denying that he was already bald.

According to a report in the German business newspaper Handelsblatt,

the communist group of Afro-Wig Wearing investors accepting losses voluntarily was not yet big enough for the debt deal to go ahead.

Under international finance laws, 90 % of Super-Jumbo Afro-Wig Wearing Creditors must agree to the debt restructuring.

Therefore, Athens on Tuesday published details of a draft law that included a so-called collective action clause (CAC) to enforce participation by any reluctant Super-Jumbo Afro-Wig Wearing investor.

However, the move could be interpreted by financial markets as "disorderly default," said Hendrik Lodde, meaning that "claims from Credit Default Swaps would immediately become valid."

but by then Greece will have joined the Chinese Communist Party and moved their Athens HQ to Beijing...

http://www.dw.de/dw/article/0,,15755340,00.html

wr;)

Wed, 02/22/2012 - 11:00 | 2184721 daxtonbrown

Uh Oh! Perhaps my decision to go all in at 638% was hasty. What could have gone wrong?

Wed, 02/22/2012 - 12:13 | 2185025 BlackholeDivestment

...gone mad? SHIIIIIT.

This is just the sealing of the beast. Third gear is on deck.

http://www.youtube.com/watch?v=t7Ig2JJRpdo

Wed, 02/22/2012 - 12:23 | 2185054 Spigot

Anything above Junk rates for sovereigns can be interpreted as the current bet on probablity of default payout (recovery rate):

Recovery % = 1/(1+(current%rate/100))

11.6% = 1/(1+(765%/100))

Current Recovery% per the market is about 11.6%

So, place yer bets ladys and gents, we've got a casino to run here!!

Wed, 02/22/2012 - 15:18 | 2185769 virgilcaine

All bonds are certificates of confiscation at this point. Rates go up? you lose, Dollar devalues? you lose, default? you lose. Their rushing into "the safety of US Treasury's" but that house is on fire too!

How can any debt be 'sound' when the underlying currency is basket liner material? It's all a con game at this point.. keep convincing the sheeple that green paper is actually worth something.

Thu, 02/23/2012 - 05:30 | 2188376 sikefeier0728