US investment firm cuts price for Greek government bond offer
LONDON, July 1 | Mon Jul 1, 2013 6:41am EDT
(Reuters) - U.S. investment firm Japonica Partners, which emerged as a buyer of Greek government
bonds last month, has cut the price it is willing to pay because of renewed worries about the country's finances.
Rhode Island-based Japonica surprised
markets in June when it launched a tender offer to buy up to 2.9 billion euros - almost 10 percent of all outstanding debt - in face value of Greece's
bonds.
Japonica has now increased the maximum nominal principal amount it is willing to purchase to 4 billion euros ($5.20 billion), the firm said in a statement on Monday.
But has cut its minimum purchase price for the bonds to 40 percent of face value, down from the 45 percent made in the original offer. This is still far below where Greek bonds are currently trading.
The changes to the terms of the offer reflect recent developments in
Greece, Japonica said, including worries about a potential 3-4 billion euro funding gap in the country, the closure of state broadcaster ERT, intra-coalition relations and a shortfall in privatisation revenues.
Athens and its international lenders resume talks on Monday to unlock 8.1 billion euros of rescue loans after a two-week break during which the government almost collapsed over redundancies at ERT.
Prime Minister Antonis Samaras has said he expects the talks to conclude successfully, despite setbacks to the country's privatisation programme and delays in public sector reforms.
Greek bonds have sold off in the past few weeks in response to these setbacks. The yield on the 10-year bond, trading at about 54 cents, has risen to around 11 percent from a little over 9 percent in early June, according to Thomson Reuters data.
Japonica, a newcomer to government bond
markets, said last month that the market for Greek government bonds was volatile, highly illiquid, and not necessarily reflective of their intrinsic value.
The firm said in its statement on Monday that the final price at which it will buy the Greek bonds would be determined through an auction process, under which investors can specify the price at which they are willing to sell. Japonica said it had extended the offer period until August 1 from July 1.