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Hedge Funds Greek Debt Trade

Hedge Funds Greek Debt Trade

Greek Debt Turning into Trade of the Year for Some Hedge Funds

It seems an unlikely way to produce huge profits these days: greek debt.  But hedge funds that scooped up dirt-cheap Greek bonds are some of the biggest winners after betting that the debt would rise in value as the prospects of a Greek exit from the Euro diminished.
News that Athens - backed by euro zone ministers and the International Monetary Fund - will buy back some its own debt from private investors sets a floor under the price of its bonds, handing many who picked them up at rock-bottom levels big gains. 
The funds - which include Daniel Loeb's Third Point - have spent months building up positions in the debt-beleaguered country's bonds, rightly betting that their price would rise as the risk of a Greek exit from the euro zone receded. 
Some have already banked profits from that bet, but indications Athens will target a cost of around 35 cents on the euro in its buyback plan, if successful, is a boon for those still holding the bonds. 
"This is very positive and a huge step forward," Achilles Risvas, chief executive officer of hedge fund Dromeus Capital said. "The probability of a Grexit has decreased significantly."
Risvas owns Greek bonds currently trading at 28.5 cents on the euro, bonds he bought at 18 and 19 cents.  Source





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