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Greece Economy Hedge Funds

Greece Economy Hedge Funds

Hedge Funds Adjusting as Greece's Economy Dwindles

Greece's economy has its neighboring European countries concerned, and hedge funds are placing bets on whether Greece will recover.  Hedge funds are shorting the country's bonds and/or purchasing default protection, and some funds may have already made gains from the troubled country.
Even hedge funds without direct exposure to Greece have been insulating their portfolios against collateral damage in the currency or credit markets, as concerns over Greece's ability to service its heavy debt have grown.

"There's been a lot of interest in sovereign risk, we've just had a client call now," said one prime brokerage executive who declined to be named.

Figures from Data Explorers this week show rising short positions on Greek sovereign bonds, indicating funds have either been directly shorting bonds or buying CDS (credit default swaps, which pay out in the event of default) from banks, who usually hedge their exposure by shorting the bond themselves.

Short positions -- as measured by the proportion of bonds available for lending that have actually been borrowed -- have risen to 9.82 percent from 9.58 percent at the end of January and 8.24 percent at the end of December.  Source

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