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.
“Greece could next issue three-year, seven-year of 10-year bonds, depending on market demand,” according to The Star.
GREK is the only one of the five PIIGS ETFs that has traded lower this year. The iShares MSCI Italy Capped ETF (NYSEArca: EWI) is the best of the quintet with a gain of more than 14% heading into Tuesday. [Italy ETF Looks Strong]
Global X FTSE Greece 20 ETF
