Thursday, 2 October 2014
Last updated 8 min ago
Mar 21 2013 | 12:26pm ET
Despite Cyprus' rejection of the European Union's bailout terms, hedge funds appear confident that the country will not default on a €1.4 billion bond that comes due in June.
Bidding on that bond is at 83% of face value, Reuters reports, suggesting that hedge funds believe that Cyprus will eventually accept the EU's terms for the €10 billion bailout money. The country's parliament on Tuesday unanimously rejected the bailout, which would require a tax on bank deposits to raise €5.8 billion.
"There is a calculated gamble here that the contagion from deposit holders is less important than the contagion you would see if the Troika forced PSI in a second European country," one fixed-income fund manager told Reuters, referring to the Greek restructuring.
"Cyprus will be absolutely fine in the short-term," LNG Capital's Steven Mitra said.
Of course, not all hedge funds are so sanguine about Cyprus' ability to avoid a default. Greylock Capital Associates has sold three-quarters of its Cypriot sovereign debt holdings over the past two weeks.
"You're betting for five or 10 points at the risk of losing 40 or 50 or more," founder Hans Humes told Reuters. "You have to be really on top of your game with this trade. Cyprus really could default."
Greylock has boosted its holdings of the debt maturing in June, but Humes said Greylock was unlikely to hold onto it until then.
"Everybody freaked yesterday," he said. "I would say we sell them before the June deadline hits unless things stabilize quickly."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...