Shares of the Global X FTSE Greece 20 ETF (NYSEArca: GREK) are off nearly 4% Tuesday on volume that is 83% above the daily average on news of a secondary offering from National Bank of Greece (NYSE: NBG).
National Bank of Greece is GREK’s ninth-largest holding with a weight of 4.3%. The $222.3 million ETF allocates 19.5% of its weight to financial services stocks, the fund’s largest sector weight, according to Global X data.
Under the terms of Greece’s bailout package, National Bank of Greece, the country’s largest bank, must deal with a $3.03 billion shortfall, Reuters reported. The bank has reportedly proposed a share offering of close to $3.5 billion, which would dilute current shareholders.
Greek banks, including National Bank of Greece, are widely held by some large hedge funds. David Einhorn’s Greenlight Capital and John Paulson’s Paulson & Co. have rushed into Greek banks. Baupost, Eaglevale, Dromeus Capital, Falcon Edge, York Capital and Och-Ziff are among the other hedge funds that last year made large bets on Greek banks. [Hedge Funds Love Greece ETF]
Although the single-country ETFs tracking PIIGS nations have bee, broadly speaking strong this year, GREK has been a laggard. Last week, made a triumphant return to the international debt market, selling $1.8 billion in six-month Treasury bills at just over 3%. Last Thursday, Greece raised $4.2 billion with bonds with interest rates just under 5%. At the height of the European sovereign debt crisis, investors demanded as much as 30% for Greek debt. Still, GREK is down almost 10% in the past week.