Hedge funds are actively pursuing all investment avenues in troubled Greece. Money managers have expressed interest in buying up not only Greek government debt and shares in Greek equities but also corporate debt.
Hedge funds buying up Greek debt
According to Wall Street Journal, a recent example was set in the debut debt offering of Hellenic Petroleum where investors were so hungry for high yielding debt that in the end the company was able to sell bonds at a lower return than initially predicted. Hellenic Petroleum wrapped up the sale at $655 million, one day befoe expected, at a yield of 8 percent after attracting total bids of over 2.7 billion euros. Hellenic Petroleum does not have a debt rating as yet and the size of the bond sale is only surpassed by two other examples in the last five years. Another Greek company, Frigoglass, is preparing to offer an initial bond sale. The refrigerator equipment manufacturer has hired HSBC Holdings plc (LON:HSBA) (NYSE:HBC) and Citigroup Inc. (NYSE:C) to recruit investors.
In regard to government bonds, hedge funds like Dan Loeb’s Third Point and Seth Klarman’s Baupost Group and several other smaller players like TT International and Pharo Macro have made profitable bets in Greek government bonds and in the debt of other distressed European economies. Baupost Group exited the position last year but Third Point still holds a stake.
The high demand for a piece of Hellenic Petroleum’s debt is driven by wealthy Greek investors, private banks and UK/US based hedge funds. In a world where one economic crisis hits one country and then the other, hedge funds have supplied companies with a way to finance their loans when local banks have failed to do so not just due to the risks involved but also because of their own insolvency. Hedge funds have also played a key role in raising capital for Greece’s bailout program by buying up stakes in government assets that are being privatized and by investing in sovereign debt.
It looks like Greece will be able to wade through the crisis it was in after all. The government has been privatizing several assets, and here again hedge funds have driven up demand. Third Point, Fidelity, Baupost Group and many other large US managers have stakes in Greek equities or are interested in buying more.