For all the wrong reasons Greece and the Global X FTSE Greece 20 ETF (NYSEArca: GREK) have been in the spotlight for several weeks now. In fact, only one non-leveraged ETF performed worse than GREK’s 22.1% loss last month.
Greek drama and “Grexit” speculation is just fine by exchange traded funds holding U.S. Treasurys, such as the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT).
“When negotiations between Greece and its creditors got bumpy last week, investors marching into safe assets such as Treasuries gave the iShares 20+ Year Treasury Bond ETF its longest string of daily inflows in more than a year, according to data compiled by Bloomberg. Deposits to the fund came after rising bond yields amid improving economic data prompted three straight weekly redemptions earlier in June,” reports Alexandra Scaggs for Bloomberg.
From June 22 through June 29, investors added nearly $574 million in new assets to TLT as Greece’s already precarious financial position worsened. The equity market there has been closed this week and banks are limiting withdrawals to 60 euros. Greece’s ASE Index would need to rise more than six-fold to reclaim its 2007 highs, according to Bloomberg. GREK was not around back then, but the ETF would need to jump more than two and a half times to reclaim its all-time of $24.93 set in March 2014. [Greek Drama Sends ETF Tumbling]
On Tuesday, Standard & Poor’s Ratings Services lowered its long- and short-term counterparty credit ratings on four major Greek banks.
The ratings agency pared its ratings on “Alpha Bank A.E., Eurobank Ergasias S.A., National Bank of Greece S.A. (NYSE: NBG), and Piraeus Bank S.A. to ‘SD’ (selective default) from ‘CCC/C’. We have also lowered our issue ratings on the banks’ senior unsecured debt to ‘CCC-‘ from ‘CCC’. We have affirmed our ‘C’ subordinated debt ratings on the four institutions,” according to a statement.