Stay tuned to Greek investment immigration and Greek financial reports. Recently, news emerged that a fund plans to acquire nearly 10% of Greece's outstanding government bonds.
According to reports in the early hours of June 4, Beijing time, many speculators have recently made substantial profits by betting on Greek government debt. However, the market was still surprised when Japonica Partners, a fund and venture capital firm based in Providence, Rhode Island, USA, announced on Monday morning its intention to acquire nearly 10% of Greece's outstanding debt.
Japonica stated that this is the first time a private investor has launched a tender offer for European government bonds, and it will also be the first time that the winners are determined through an unmodified Dutch auction.
The minimum purchase price set by Japonica is 45% of the bond's principal amount, which represents a 26.5% premium over the average price of the Greek government's bond buyback in December 2012, and a 15.2% premium over the average closing price on March 27. The company stated that it intends to purchase up to 2.9 billion euros (approximately 3.8 billion US dollars) in face value of Greek government bonds, an amount that reaches nearly 10% of Greece's outstanding government debt.
The fund issued a statement regarding the tender offer in Frankfurt today, summarized as follows:
This is the first tender offer for European government bonds initiated by a private investor.
This is the first Dutch auction for sovereign debt.
The price is significantly higher than the Greek government's buyback price in December 2012.
Japonica is tying its long-term investment returns to Greece.
This invitation maximizes flexibility for both parties, allowing the acquirer to complete the purchase immediately while also granting investors the right to withdraw their auction bids before the offer is accepted or expires. Barring any other changes, the deadline for this tender offer is expected to be 5:00 PM Central European Time on July 1, 2013.
Japonica believes that the Greek sovereign debt market is volatile, highly illiquid, and fails to fully reflect its intrinsic value at any given moment. During the 42 trading days of the first quarter of 2013, its historical price volatility included an average decline of 27.8%. The minimum purchase price represents a certain discount relative to recent average prices.
A spokesperson for Japonica stated: “This tender offer demonstrates Japonica's long-term view of Greece and the progress the country has made to date. Japonica's goal is to link its own investment returns to Greece.”
Japonica was founded in 1987 by former Goldman Sachs banker Paul Kazarian. In 1989, he rescued the bread maker and coffee machine manufacturer Sunbeam-Oster, and subsequently launched a hostile takeover of the Chicago and North Western Railway, successfully forcing a competing consortium to offer a high price. Later, he attempted to restructure Borden, but ultimately failed and sold it to KKR.
Greek sovereign debt has surged by nearly 400% over the past year.