Hedge Funds Greek Bonds
Hedge Funds Look to Unload Stockpile of Greek Bondsturned to the courts to turn a profit on Greek debt after news of a probable haircut, other hedge funds are simply trying to exit the position selling off Greek debt as fast as possible. This is according to traders and brokers, many hedge funds bought Greek debt (some $5.2 billion worth) last month but now they are trying to offload those bonds ahead of their March 20 maturity date.
Hedge funds that in the last month or so have purchased an estimated 4 billion euros ($5.2 billion) of beaten down Greek bonds that mature on March 20 are now trying to unload their positions, according to brokers and traders.
That is because it is becoming clear to one and all that Greece — under pressure from its financial backers — is preparing to impose a broad-based haircut that would hit all investors with a loss of 50 percent or more, whether they agree to the deal or not.
The problem is that while buying the bonds over the last few months was easy, as many European banks were unloading their positions, getting out now is proving to be near impossible. Liquidity has dried up and investors are avoiding Greek paper as if it were the plague.
The poor outlook for early maturing Greek bonds was compounded on Wednesday when Christine Lagarde, managing director of the International Monetary Fund, said the public sector might have to participate in a restructuring deal with private sector creditors. Source