The Greek decision confirmed people’s assumptions as on May 15 the country made a €436 million bond payment to holdout investors. People involved in the transaction revealed that almost 90 percent of the money went to the Dart Management’s hands. This is a secretive investment fund company located in the Cayman Islands. Dart is one of the most famous institutions that employs the so-called vulture funds. This involves purchasing toxic assets and bonds of financially-decrepit countries like Greece, Spain, and some others. And when a certain country cannot pay them, they file a lawsuit against its government. One definite example of this scenario was during the Latin American Debt Crises that took place years ago engaging Dart and another vulture fund, the Elliot Associates.
The management is bound to make massive profits having received 100 cents on the dollar, with the accumulation of bulks of Greek bonds at prices estimated by traders from 60-70 cents on the dollar. Another payment is expected this coming September, but it comes in a lesser amount. Officials instigated that large payments had something to do with Greece having no central governing power. There were also existing fears and concerns that these vulture funds and other stakeholders of the same bonds would sue Greece. This would literally disqualify the country to avail the European bailout funds on which the nation is depending to continue doing its business.
The decision to transact with Dart and other holdout issues were already considered by Greek politicians, citizens and economists alike. Market experts foretell that these would infuriate smaller investors who sacrificed some of their stakes in the government’s bonds. Jason Manolopoulos, a hedge fund investor and author of a book tackling Greece’s debt crisis, believes that the decision was a grave mistake because it would give them leverage to attack pro-European parties. With another elections scheduled to take place in June, the new government’s attitude towards holdout investors may change and harden.
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