Hedge fund vultures circling Greece

[marmar]

from Der Spiegel:



The negotiations over the Greek debt haircut are becoming increasingly suspenseful, with euro-zone finance ministers and the IMF pushing investors to accept greater losses. Hedge funds, more than any others, stand to profit, and are betting that the voluntary debt rescheduling will fail.

Who will bleed for Greece? For weeks, private creditors like banks and insurers have been trying to negotiate a debt rescheduling with the country without success. Even when they seem close to agreement, it remains unclear if all creditors are on board. In particular, hedge funds that own Greek bonds could have a significant interest in ignoring the results of the negotiations, instead preferring to focus on an official national default.

The greater the planned haircut fails, the more plausible this calculation will be. Bank representatives assume in the meantime that many hedge funds are not really interested in an agreement. With a controversial investment strategy they have assured themselves of profiting with either a low level of Greek bad debts, or a complete Greek bankruptcy.

At issue are Greek bonds with a total volume of about €200 billion. How many are owned by hedge funds is unclear, but the amount is estimated to be about €70 billion (including other funds). ..................(more)

The complete piece is at: http://www.spiegel.de/international/europe/0,1518,811295,00.html

[dipsydoodle]

1. They're covered by default insurance

which is covered by default insurance, which is covered by default inurance. ..............zzzzzzzzzzzzzzzzzzz.

Its the CDS market which will go up in smoke.

[DCKit]

3. They wanna get paid twice and bailed out, too.

We set the precedent.

[meow2u3]

2. The Greeks should give the hedge funds a big FU

and tell those vultures to kiss their collective asses! So should the Italians, Irish, Portuguese, and Spaniards.