Vega Threatens Lawsuit Over Greek Debt Talks

Dec 22 2011 | 2:25am ET

It seems that, in quitting a creditors committee, Vega Asset Management was playing softball over the restructuring of Greece’s debt. Hardball could come in the form of a lawsuit.

The Madrid-based hedge fund this month told its fellow investors in Greek bonds that it might sue if Greece sought to write down its debt by more than 50%. The only fund to serve on the creditors steering committee, Vega’s stance could sink Greece’s proposed voluntary bond swap.

“Vega believes that, given the current position of the official sector, a voluntary exchange that implies a NPV loss of 50% or less is not now a likely outcome,” Vega executive Jesús Sáa Requejo wrote on Dec. 7. “Vega needs to start considering all available legal options to refuse and challenge any exchange that implies a NPV loss of more than 50%.”

Greece and its creditors have agreed to a nominal 50% write down. But Greece is pushing for new bonds with an additional decade of maturity at half the coupon sought by the creditors.

According to the Financial Times, Vega’s ire has been raised by the negotiating approach of Greece, the European Union and the International Monetary Fund. It has also expressed anger that the European Central Bank has refused to take any losses on its holdings or to allow Greek banks to accept write downs.

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