Vulture funds who bought international Greek bonds at discounts are circling ahead of Tuesday’s deadline to repay a 436m note issued long before the name Greece became synonymous with “crisis”.
“You have a dying corpse and everyone is trying to get a bite,” Andreas Koutras, a Greek national and analyst at London’s In Touch Capital Markets, toldChannel 4 News.
The question of whether Greece, which still has not formed a government, can repay 436m euros due on a floating rate note issued 10 years ago has rollicked the markets.
Vulture funds, which target countries who may default on their obligations, bought Greece’s international bonds at a discount and are now demanding payback at face value. If Greece refuses to pay up, the funds will threaten to drag Greece through the English courts for payment in a year or two.
“The chances of these bonds being paid right now are very slim,” Mr Koutras said. “If these bond holders come from hedge funds who’ve done this before they know how the game is played. That means litigation. If they are sophisticated bond holders then you will have litigation like in Argentina.”
Funds who reportedly bought Greek government bonds (GGBs) include Elliott Associates, which successfully held out on Argentina’s and Peru’s sovereign restructurings.
US asset managers Loomis Sayles and BlackRock, Swiss bank Julius Baer, French asset manager Natixis, German fund StarCap and Luxembourg-based Ethenea Independent Investors bought about 150mn euros of Greek sovereign debt in the secondary market in 2011, according to Bloomberg data.