The mysterious Japonica Partners is back again with a renewed offer, which enlists a lower price for a major chunk of Greek debt. Earlier Japonica had bid for 9.9 percent of outstanding Greek Bonds issued in 2012 with a face value of $3.8 billion at minimum purchase price of 45 percent. The modified offer seeks to purchase about 4 billion euros, or $5.22 billion, in GGBs at a minimum price of 40 percent. The offer expires on August 1.
Greece Faces Funding Gap of 3.7 Billion Euros
The lowered offer comes in the wake of Greece’s troubled prospects of funding its share of bailout funds and fear of the troika imposing losses on holders of Greek debt. The IMF threatened to cut off aid to Greece if it fails to furnish the funding gap of 3.7 billion euros. Greek bonds have declined 12 percent since Japonica forwarded its first tender offer on June 3, and the firm said that bid was revised as Greek bonds are volatile and highly illiquid. Despite Japonica’s offer for a major piece of Greek debt, which now makes up 13 percent of the outstanding bonds, the 10 and 30 year bonds are trading at more or less the same price, and it seems that investors are unmoved by Japonica’s interest in Greek debt.
Klarman And Loeb Buy Greek Bonds And Equities
Greek bonds and equities arrested the interest of foreign investors, especially hedge funds, who are among the largest investors in Greek bonds. Several noted U.S. based investors like Dan Loeb and Seth Klarman have invested in Greek debt over the last year and its is highly probable that they still hold a position. Pharo Macro, a $1.8 billion global macro hedge fund, also has a long position in Greek bonds. Hedge funds have entered these trades for the long haul and are looking for larger gains.
Loeb and Klarman are also bullish on Greek equities, and Klarman’s Baupost Group holds a stake in gambling monopoly OPAP, whereas Loeb’s Third Point bid for a 33 percent share in the same company back in April. Third Point’s bid was rejected because of unacceptable terms for trading OPAP shares. Recently it has started to look like the country would have trouble in privatizing the remaining 33 percent of state owned OPAP when the only bidder, Emma Delta, demanded changes in the contract. Greece is hoping to raise 700 million euros from this sale to fill the remaining gap of 3.7 billion euros in its bailout program.
Japonica Partners is run by a former Goldman Sachs banker, Paul Kazarian, and is based in Providence, Rhode Island.