January 18, 2012
A group of hedge funds is threatening to block a last-ditch attempt to save Greece from defaulting on its huge debt pile, unless they are guaranteed a significant payout.
There will be a final attempt today – when a group representing Greece’s private sector bondholders meets senior ministers in Athens – to negotiate a writedown of the value of the country’s debt ahead of a crucial bond repayment deadline next month.
Sources familiar with the talks, which collapsed at the end of last week, have said that a number of hedge funds are holding up the restructuring deal to ensure that they make a fat profit, after snapping up Greek bonds at distressed prices.
Greece’s official backers – European governments and the International Monetary Fund – have said they will not deliver the next tranche of bailout funds that Athens needs to redeem €14.4bn (£12bn) in maturing bonds on 20 March unless a deal to cut Greece’s €355bn debt pile by €100bn is concluded by the end of the month. Without those bailout funds, Athens will be forced into a disorderly default, which could plunge the eurozone into further financial chaos and possibly prompt Greece’s exit from the single currency.