When will hedge funds cut Greece loose, asks equity chief - The Best from Greece

Posted on: 27/Jan/2012

MANNHEIM: As private holders of Greek debt and public officials enter another round of crisis talks, Alliance Bernstein's James Ross, said he couldn't understand why hedge funds were 'still playing ball'.

'My question about the whole negotiations is why hedge funds don't hang the Greeks out to dry?' said Alliance Beernstein's co-head of equity portfolios at the Fonds Professionell Kongress in Mannheim.

'The CDS they hold on Greece would surely cover them in an event of a default.'

Greece needs to get a lender-agreed loss, otherwise known as haircut, on its debt before a major bond redemption in March. The country otherwise faces default, a scenario with unprecedented ramifications for the euro area.

'On balance, I think we will get a settlement in the coming days,' said Ross. 'There are legalities in place on what investors could get back on bonds in case of a default that is probably keeping most of them in negotiations.'

The European Central Bank, the single biggest holder of Greek debt at €40 billion, is under pressure from private lenders to also take cuts on Greek bonds.

Yields on Italian debt fell on Thursday as the country auctioned short term bonds at lower cost.

IMF chief Christine Lagarde had warned earlier this week the ECB may need to take cuts on its Greek bond holdings.

source: http://www.citywire.co.uk/global/when-will-hedge-funds-cut-greece-loose-asks-equity-chief/a561552?ref=citywire-global-latest-news-list

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