25/01/2012 Author: Will Wainewright

Hedge funds wary of Greek debt crisis

Many hedge funds are wary of getting involved in the Greek debt crisis due to its unpredictable and politically sensitive nature, despite the industry receiving blame in some quarters for “blocking” a write-down deal last week.

A source at one $3bn fund of hedge funds (FoHF) firm told HFMWeek that the funds they invest in are “terrified” of getting involved in Greece, where the government is attempting to persuade private bond holders, mainly European banks and hedge funds, to accept a voluntary haircut of up to 50% on their investments.  

Hedge funds including $14bn York Capital Management and $28bn Och-Ziff Capital Management were blamed in a newspaper report for “blocking” a deal. Both subsequently denied involvement in the talks.

Another FoHF source said: “My feeling is that hedge funds are still waiting on the sidelines, rather than getting actively involved. There may be some good opportunities to buy Greek assets once the haircut has been made.”