According to translations by Barron’s, the Greek paper Banking News has described hedge funds as taking advantage of a ‘waiting game’ right now whereby markets are awaiting clarity as to whether or not Greece will ask the IMF for help.
They reportedly have 10 to 12 days left to keep ‘playing’ Greek government bonds, while formal assistance procedures are processed by the IMF.
The hedge funds, the paper speculates, are hoping uncertainty over Greece’s situation keeps the spread between Greek bonds and German bunds widening. Today the 10-year Greek treasury bill was at 475 basis points above the yield on comparable German bunds, as the Financial Times’s Kerin Hope reports in Athens.
Hedge funds and others shorting Greek debt are hoping that spread might widen to as much as 500 to 600 basis points before the IMF steps in, whereupon the funds will have to relinquish their speculative bets, the paper asserts.
Thing is, hasn’t consensus already digested IMF support into market prices for Greek debt? IMF support, combined with Euruozone support, seems like the most likely scenario.
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