The same hypothetical leveraged positions expressed as a percentage gain or loss...
When I first started writing this post this morning, the only other bond markets getting hit were Portugal's. After the aforementioned downgraded, I would assume we can expect significantly more activity. As you can, those holding these bonds on a leveraged basis (basically any bank that holds the bonds) has gotten literally toasted. We have discovered several entities that are flushed with sovereign debt and I am turning significantly more bearish against them. Subscribers, please reference the following:
- Leveraged European Entities from a Sovereign Risk Perspective - retail
- Leveraged European Entities from a Sovereign Risk Perspective - professional
To date, my work both free and particularly the subscription work, has shown signifcant returns. I am quite confident that the thesis behind the Pan-European Sovereign Debt Crisis research is still quite valid and has a very long run ahead of it. Let's look at one of the main Greek bank shorts that we went bearish on in January: