Awaiting a Greek Payout-NYT 1/19 : 그리스 국가부채 위기 해결 전환점 국채 개인투자자 손실 협상 전망

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By LANDON THOMAS Jr.

LONDON — Could Greece’s next rescue payout go straight into the pockets of London hedge funds?

That, more or less, is the bet that a growing number of investors are making now as they load up on Greek government securities that mature in March. That is when Athens hopes to receive a potentially make-or-break bailout payment — a lifeline of as much as 30 billion euros ($38 billion) from the European Union and the International Monetary Fund.

Greece’s new prime minister, Lucas D. Papademos, has warned that without that infusion, his country might well default on its debts, a move that might force Greece to leave the euro currency union.

So even though Greece is already effectively bankrupt, some investors are buying and holding the country’s short-term debt — gambling that, at least in March, Athens will make a point of paying its creditors. The risks those investors run, though, include the possibility that their very actions could help discourage the European Union and I.M.F from handing Greece the March bailout installment that would enable Athens to make those debt payments.

With the stakes so high, investors are betting that Europe will go the extra mile to keep Greece afloat. And if the price to do that means that taxpayer funds end up bolstering the returns of a few hardy speculators — then, as far as those investors are concerned, all the better.

Such a trade-off, however, carries ramifications that go well beyond the profit motives of its participants.

For months now, Greece has desperately been trying to persuade its private sector creditors — its bondholders that are not other governments — that it is in their interest to exchange their existing Greek bonds for longer-term securities, while accepting about a 50 percent loss as part of the bargain. The negotiations are known as the private sector involvement, or P.S.I., to employ the widely used shorthand.

A few months ago such a deal looked doable, as the large European banks that held most of this private sector debt, estimated to be about 200 billion euros, recognized that it was probably a better alternative than a default by Greece, which could wipe out their holdings. Moreover, the banks were vulnerable to political pressure from their home countries, where they have a big stake in remaining on good terms with the government and important officials.

But as the talks have dragged on, many of these banks, especially big holders in France and Germany, have sold their holdings. Among the buyers have been London hedge funds and other independent investors that are now questioning why they should accept a loss — if at least in the short run Greece keeps meeting its debt payments.

And as the number of such hedge funds holding Greek debt has grown, so has their ability to forestall a restructuring private sector agreement, thus bringing them closer to being able cash in on their risky tactic.

“They are calculating that Greece will not default before March,” said Mitu Gulati, a sovereign debt expert at the Duke University School of Law and a co-author of a recent paper on the dynamics of the debt restructuring process in Greece.

Mr. Gulati points out that it is these investors that are in many ways behind the delay in executing a private sector involvement. deal. “If you own a bond that matures in March and it is January, then you have every incentive to delay,” he said.

Yet private sector involvement could prove a crucial component of the set of provisions that Greece must meet to receive its next lifeline payment from Europe and the I.M.F.

The private sector loss agreement was expected to lower Greece’s borrowing expenses by as much as 100 billion euros through 2014. The agreement was also supposed to reduce Greece’s ratio of debt to gross domestic product to 120 percent by 2020, down from about 143 percent today. In short, the private sector involvement represents a crucial pillar of the 199 billion euros in financing that Greece will need from outside sources in the next three years.

The German chancellor, Angela Merkel, the most vocal proponent of requiring some sacrifice on the part of private sector lenders, has been the most forceful political leader in pushing for a resolution of the negotiations. Mrs. Merkel met with Christine Lagarde, the managing director of the I.M.F., in Berlin on Tuesday. They issued no statement, but aides said Greek debt was high on the agenda. Ms. Lagarde was then to meet Wednesday with the French president, Nicolas Sarkozy, in Paris.

Bankers say that some I.M.F. officials are pushing for an even steeper loss to be imposed on private investors, reflecting a sense within the I.M.F. that Greece’s debt position has become unsustainable — even if the private sector were to accept a 50 percent cut in the value of its existing debt holdings.

All of this is why the bond holders and speculators are making such a risky bet. Aside from the default danger, Greece and Europe may well be able to insert provisions into a private sector agreement that would prevent “free riders” — as the holdouts are sometimes called — from receiving their bond payments at all. Since the older bonds coming due in March are governed by Greek law, such procedures are an option.

In this vein, Greece has taken steps to retroactively insert so-called collective action clauses into the bond contracts. These give the debtor the right to impose a restructuring on all creditors, including holdouts, once a certain majority of support for the private sector agreement. is reached.

But some analysts see this right as moot. If a majority vote of bondholders could impose its will on a minority, the deal might no longer be seen as voluntary. And a voluntary agreement has been considered crucial to avoid activating credit-default swaps — a type of insurance against Greek debt default that many investors have bought.

Activating credit-default payments is an outcome that European, particularly Greek, officials have been desperate to avoid. That outcome could lead to the same sort of expensive and unpredictable cascade of debt obligations throughout the financial system that endangered the banking system during the American subprime real estate collapse a few years ago.

Another option for getting investors to go along with some sort of private sector deal is that Europe and the I.M.F. contribute more money to make the exchange more palatable. That would provide a carrot to the holdouts. But it would require more money from Europe and the I.M.F., which could be difficult to raise, given the public resistance to providing more bailout money to Greece.

The bonds in question are trading at about 40 cents on the euro, a significant premium to the longer-dated securities that trade at about half that level, reflecting a market view that over the long term Greece will probably default, no matter what.

A chunk of the bonds mature on March 20, when Greece must come up with 14 billion euros, a payment it will not be able to make without aid from the European Union and the I.M.F.

In a recent report, JPMorgan Chase estimated that as much as 80 billion euros in Greek bonds were now owned by independent investors, including hedge funds, sovereign wealth funds and other asset managers.

The bankers’ lobby that represents the creditors — the Institute of International Finance — has said that it expected enough creditors to agree to the private sector deal. But it is not clear how much sway the institute has over those inclined to reject the terms, especially hedge funds looking to make a quick profit.

Already two outfits, Talanx, a German insurer, and Vega Asset Management, a hedge fund based in Spain, have publicly opted out. If many more join them, Greece may fail to secure the restructuring agreement — a deal that a few months ago seemed close to success.