Real Money Trumps Speculators in Greece’s Euro Bond Sale Return


Real Money Trumps Speculators in Greece’s Euro Bond Sale Return

Traditional sovereign-bond buyers are returning to Greece.

Fund managers snapped up more than two-thirds of the notes sold in a 2.5 billion-euro ($2.9 billion) sovereign sale on Tuesday, compared with just 37 percent in the country’s return to the primary market about a year ago. The share allocated to hedge funds tumbled to 11 percent, according to a person with knowledge of the matter, who asked to not be identified as they aren’t authorized to speak publicly

“A lot of the big hands were all over it,” said Mark Nash, head of fixed income at Merian Global Investors Ltd., who bought about 5 million euros of the five-year notes at syndication as a long-term investment. “There’s a lot of cash out there to go to work.”

The rebounding appetite for Greek debt among fund managers — major buyers of developed-market sovereign bonds — may help the nation pare borrowing costs as it’s no longer so reliant on hedge funds demanding high payments for high risks. The country has had few alternatives because ratings downgrades into junk territory nearly a decade ago cut it off from the trillions of dollars overseen by high-grade only investors.

The nation, rated six steps below investment grade at Moody’s Investors Service, isn’t out of the woods just yet. It priced its five-year notes to yield 3.6 percent, nearly double the 1.978 percent Portugal — which has the lowest investment-grade rating — paid to sell 10-year notes earlier this month.

“We think it is highly likely Greece will be excluded from benchmarks and will not have a “natural” buyer base,” said Kaspar Hense, a portfolio manager at BlueBay Asset Management. He doesn’t expect the country to become a regular issuer of new bonds over the next couple of years.

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