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Greek Bonds Rise as Japonica Offers to Buy $3.8 Billion of Debt

June 03, 2013

Greek Bonds Rise as Japonica Offers to Buy $3.8 Billion of Debt

A European Union flag flies outside the Hellenic stock exchange in Athens. Photographer: Simon Dawson/Bloomberg

Greek government bonds advanced after a U.S. investment firm offered to buy as much as 2.9 billion euros ($3.8 billion) of the securities.

Japonica Partners & Co. said it would purchase the Greek bonds issued last year through a tender offer that expires July 1, according to a statement released by the Providence, Rhode Island-based firm today. Japonica said it planned to purchase almost 10 percent of the total debt outstanding, which has a face value of 29.6 billion euros.

The yield on Greek bonds due in February 2042 fell 14 basis points, or 0.14 percentage point, to 8.53 percent at 3:17 p.m. London time. The price of the nation’s 30-year bonds was less than 47 cents on the euro, reflecting concern that a shrinking economy and political strife over budget cuts will hamper efforts to repay debt.

“They have a long-term perspective on Greece,” Xander Heijnen, a spokesman for Japonica at Munich-based CNC Communications & Network Consulting, said in a phone interview. “People who don’t like the volatility will have to consider this offer. Japonica is basically saying to the market, tender now and tender low.”

Greek government bonds returned 29 percent this quarter through yesterday, the best-performing securities among the 26 markets tracked by Bloomberg and the European Federation of Financial Analysts Societies. The bonds rallied amid signs the nation has taken steps to tackle its deficit, with Fitch Ratings upgrading Greece one level to B- from CCC last month.

Dutch Auction

The 10-year Greek yield fell 11 basis points to 9.28 percent today after surging to as high as 44.21 percent before private bondholders agreed to write off more than 100 billion euros as part of a restructuring of the nation’s debt in March 2012. Greece agreed in December to pay 11.3 billion euros to buy back 32 billion euros of bonds, reducing its debt burden.

The market for Greek bonds doesn’t reflect their intrinsic value, due to volatility and illiquidity, Japonica said in today’s statement.

Japonica wants to buy the securities through a Dutch auction, in which investors can specify the price, within a set range, at which they are willing to sell Greek securities. The minimum purchase price Japonica will offer is 45 percent of the bond’s principal amount, according to the statement.

Heijnen declined to comment on how much money Japonica manages, whether it already owns Greek debt or any discussions the company has held with other bondholders. The firm doesn’t plan to appoint any banks to oversee the Dutch auction, he said.

Japonica is headed by Chairman and Chief Executive Officer Paul Kazarian, a former Goldman Sachs Group Inc. (GS:US) investment banker. The company was founded in 1988, according to its website. Its previous investments include the $630 million purchase of Alleghany International and leading a $250 million initial public offering of Sunbeam-Oster after the maker of home appliances declared bankruptcy, according to the website.

To contact the reporters on this story: David Goodman in London at; Jesse Westbrook in London at

To contact the editors responsible for this story: Paul Dobson at; Edward Evans at

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