Perry Predicts Greek Debt Could Eventually Trade At Par

Jul 15 2015 | 3:40pm ET

At least one hedge fund manager is publicly bullish on Greek debt.

Richard Perry, whose Perry Capital manages more than $10 billion, has predicted Greek bonds will eventually trade close to par, aided by agreements with creditors and bond buying efforts by the European Central Bank.

“There will be debt relief that the European creditors had promised in 2012 that will be delivered between 2015 and 2018,” said Perry during a conference in New York this week. 

Greek bonds are currently trading at less than 50 cents on the dollar following a roller-coaster ride through June and early July as Greece, its Eurozone creditors, the IMF and the ECB negotiated a way through the country’s financial morass.

In addition to Perry’s firm, several hedge funds have swooping in to buy the debt in recent weeks, including Monarch Alternative Capital and Knighthead Capital Management.

The deal is far from certain. Greek Prime Minister Alexis Tsipras is trying to convince an unruly parliament to back the compromise arrangement, which packages a series of austerity measures with a bailout worth potentially €86 billion hammered out over the weekend. 

Unfortunately for Tsipras, the deal he is pitching is worse in some ways than the one the Greek electorate overwhelmingly rejected in a snap referendum a few weeks ago. Accordingly, protests are rampant and opposition lawmakers are rallying support to reject the arrangement and send both Tsipras and the Eurozone back to the drawing board – a result that would be almost certainly fatal to Greece’s membership in the 19-member euro currency. 

At the conference, Perry also expressed bullishness on Puerto Rican debt, which is facing a similar debt crisis as the one that has befallen Greece. As with Greece, hedge funds have been drawn to the situation as a chance to potentially buy tax-free bonds at extremely depressed prices. 

Perry noted that PR was in significantly better shape many realize. “It is often mischaracterized in the U.S. and painted like Detroit,” he was quoted as saying by Bloomberg, despite debt levels carried by the commonwealth at about 70 percent of GDP. That’s lower than in many other developed countries, including Japan.

“The government obligations that are really in the highest part of the pecking order, they are going to have to trade at par if they’re going to make this restructuring work,” Perry at the conference.


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