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‘Free Ride’
“If the ECB is out, then for sure you should try to free ride on the back of the ECB,” Koutras said. “You’d be stupid to actually participate if the ECB does not.”
The first test of that trade is in March, when about 14.4 billion euros of debt matures. Government bonds redeemable on March 20 fell to a 52-week low of about 40 cents on the euro on Nov. 29, according to data compiled by Bloomberg. The bonds rose to 49 cents on December 19. It traded at about 44 cents as of yesterday.
Trun-Tin Nguyen, a hedge fund manager at TTN NG in Zurich, said he’s been buying the bond on the expectation policy makers will fail to reach an agreement before March.
“The bet is that either way, they will repay this one,” Nguyen said in an interview. “Before March, no solution should be achieved, whether it’s a haircut or a default.”
Bloomberg
“If the ECB is out, then for sure you should try to free ride on the back of the ECB,” Koutras said. “You’d be stupid to actually participate if the ECB does not.”
The first test of that trade is in March, when about 14.4 billion euros of debt matures. Government bonds redeemable on March 20 fell to a 52-week low of about 40 cents on the euro on Nov. 29, according to data compiled by Bloomberg. The bonds rose to 49 cents on December 19. It traded at about 44 cents as of yesterday.
Trun-Tin Nguyen, a hedge fund manager at TTN NG in Zurich, said he’s been buying the bond on the expectation policy makers will fail to reach an agreement before March.
“The bet is that either way, they will repay this one,” Nguyen said in an interview. “Before March, no solution should be achieved, whether it’s a haircut or a default.”
Bloomberg