By Alasdair Pal and Abhinav Ramnarayan
LONDON Reuters – Short sellers and derivatives traders are betting Deutsche Bank’s DBKGn.DE share price recovery will prove temporary, with data suggesting short interest in the German lender is the highest of any global bank.
Germany’s largest bank saw its shares slump to near record lows last week after a credit rating downgrade, reports the U.S. regulator viewed it as “troubled” last year and upcoming results of U.S. stress tests.
Supportive comments by European Central Bank sources on Friday have helped Deutsche shares rise 6 percent off recent lows, while the yield on its 1.75 billion-euro CoCo bond, the most junior debt category, has slipped 200 basis points from last Thursday’s 15-month high of 9.24 percent. =>
But the bank is still in the sights of short sellers, who borrow stock in order to sell it, with the aim of buying it back at a cheaper price and pocketing the profit.
Nearly $1 billion of Deutsche stock is currently out on loan – a key indicator of short interest and the highest of any global bank in dollar terms, according to data provider FIS Astec Analytics.
Deutsche is also the most borrowed stock on Germany’s blue-chip DAX .GDAX index, according to Markit, another data provider. situs judi online Around 5 percent of Deutsche stock is currently out on loan, its highest level in more than a year.
Funds with short positions in Deutsche include Marshall Wace and AQR Capital Management, according to regulatory filings. Both firms declined to comment on the rationale behind the position.
Several bankers and brokers doing business with Deutsche told Reuters they were monitoring key stress indicators, especially short interest on Deutsche, but were not overly concerned.
“Don’t get me wrong, the Deutsche situation is worrying – I’m watching the shorting interest closely – but nothing where we need to take action yet,” said a senior investment banker at a rival lender that does business with Deutsche.
Meanwhile, options markets show traders continue to hedge against further share price falls on Deutsche.
The open interest putcall ratio – a gauge of how many options are in existence that give the right to sell a stock as opposed to buy it – was 1.28 on Tuesday.
The ratio can be volatile, but on a one-month average the ratio stands at 2.23, exceeding a peak during May 2014 and approaching levels not seen since the 2008 financial crisis.
“Anything above 1 is indicative of bearish sentiment – people are buying more puts than calls – so the numbers at the moment suggest increased bearishness in the short term,” said Chris Beauchamp, an analyst at options trading platform IG Group.