Thursday, 21 August 2014
Last updated 21 min ago
Jan 18 2012 | 11:53am ET
A group of hedge funds and the Greek government may be on a collision course if talks between the deeply indebted country and its creditors do not produce an agreement this week.
Five hedge funds, which together own a chunk of the estimated $260 billion in Greek bonds held by creditors, have balked at taking more than a 50% haircut on those holdings. And Greek Prime Minister Lucas Papademos has threatened to force them to accept the losses by law if a deal cannot be reached. Without a deal, Greece could default on its debt as soon as March, with potentially catastrophic consequences for the global economy.
The hedge funds, GreyLock Asset Management, Marathon Asset Management, Och-Ziff Capital Management, Vega Asset Management and York Capital Management, snapped up the debt at distressed prices and want a guaranteed profit on the investments. The International Monetary Fund and Germany, the biggest contributors to Greece's bailout fund, want an annual coupon of 2% for new bonds, which would slash the value of those bonds by up to 75%. The hedge funds have refused to countenance a loss of more than 50%.
Charles Dallara, who represents private bondholders, is in Athens for talks after the IMF, European Central Bank, European Union and Greece convinced him that there was a significant chance at a deal.
If there isn't a deal, Papademos said he is prepared to declare war: Without 100% participation, he said, he'll pass legislation forcing holdouts to take the losses.
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note