OPPORTUNISTIC hedge funds were celebrating the “trade of the century” yesterday as Greek authorities agreed to pay out €435m (£346m) of bonds that were not included in recent haircuts.
Owners of euro-denominated Greek bonds have taken a loss on their investments as part of March’s bailout agreement for the debt-ridden Mediterranean state. Yet bonds denominated in currencies such as sterling, which are liable to laws outside Greece, now appear more likely to be paid up in full.
“Bonds in sterling were redeemed at par [100 per cent], but many were snapped up with a discount of 70 per cent back in December and January,” a source familiar with the matter told City A.M. “Major banks and pension funds were selling them off cheap, at around 30 per cent level – perhaps they didn’t want the risk.”
The payment could provoke more anger on the streets of Athens, but lawyer Jonathan Henes of Kirkland & Ellis in New York said that it keeps all options on the table.
“With this payment it looks like Greece is saying ‘we’re not defaulting and leaving Eurozone’,” Henes said.
Yet Greek authorities insisted that remaining foreign bonds would not necessarily be paid out in full.