Tuesday, March 23, 2010

Major Short-Seller of Greek Debt Was Government Owned Greek Bank

The Greek newspaper Kathimerini reports that state-controlled Hellenic Post Bank bought €950 million of credit default swap protection on the Greek sovereign. The size of the position, roughly 15% of the total outstanding, would have made it one of the largest buyers of protection on Greece. According to the newspaper, the bank made a €35 million profit by unwinding the swaps in December when the spread was 235 basis points.

So much for the attacks on hedge funds leading the downward push on Greek debt.


  1. Hi Bob -

    That's interesting...but it doesn't prove anything about whether there was or was not fraud in the whole set up..it just means, that so far, the instrument of fraud wasn't the cds in this case..

    In the case of Malaysia, if you'll recall, after Mahathir's comments about Soros and currency manipulation, it turned out the Malaysian government was also speculating (not very successfully)...but that's still beside the point..
    Anyone is free to speculate..
    a concerted attack is another thing.

    In that regard, it's interesting that the SEC and the Wash Po are spending so much time revisiting Allied Capital...sure sounds like a PR job setting up certain hedge funds as good guy "activists"..

  2. @Lila

    What kind of fraud are you thinking may have occurred?

    The Greek gvt really owes a lot of money they can't pay. That's reason enough for their debt to go down and it seems that Hellenic Post Bank thought the same.