Dart 1: Greece 0; And Just Desserts For Lemming PSI Participants

Tyler Durden's picture

Two months ago, to much fanfare, Greece and the IIF announced what a smashing success the forced cram down that was the Greek PSI (memories of GM and Chrysler should be flooding back here) was. The thinking went that Greece avoided bankruptcy, co-opted lemming creditors avoided pursuing what is rightfully theirs in exchange for a 75% haircut, hold out hedge funds would be blown out of the water for daring to not go with the herd of 96.6%, but most importantly, Europe was saved! Today, Europe is no longer saved, and all those hedge funds that folded like cheap lawn chairs in agreeing to Europe's extortion are getting annihilated, because as the chart below shows, the NEW Greek bonds have now seen their dollar price cut in half since the PSI. Which means that total looses on original Greek debt, for those who did agree to the PSI's arm-twisisting terms are now about 90%. Just desserts.

But what happened to those other few who followed our advice, bought UK-law bonds, and told the group to shove it? Here's what (from the NYT):

Vulture funds 1. Greece 0.


When Greece announced on Tuesday that it had made a €436 million bond payment to the hold-out investors who rejected the country's historic debt revamping deal in March, the decision came as no surprise. After all, with the Athens government in disarray and investors wary of having anything to do with Greece, now would be a bad time to make things worse by defaulting on a bond payment.


What’s news is where most of that money went. Almost 90 percent was delivered to the coffers of Dart Management, a secretive investment fund based in the Cayman Islands, according to people with direct knowledge of the transaction.


Dart is one of the best known of the so-called vulture funds, which have a track record of buying the distressed bonds of nearly bankrupt countries — and if they do not get paid, suing the governments for the money. Dart and another big vulture fund, Elliott Associates, perfected that strategy during the various Latin American debt crises in years past.


By accumulating the bulk of these bonds at prices that traders estimate to be from 60 to 70 cents on the dollar, Dart stands to make a hefty profit, having received 100 cents on the dollar — an outcome likely to be especially galling to the Greek banks and other local institutions that were forced to take a 75 percent loss on their Greek bond holdings.


“They caught us at the weakest possible time,” said Gikas Hardouvelis, a senior economic adviser to Prime Minister Lucas Papademos who was involved in the decision making process. “But it does not prejudice future judgments on this matter.”


Dart’s payday may well offer encouragement to other holdouts among investors now in possession of about €6 billion, or $7.6 billion, in Greek bonds. Another payment is due in September, although for a lesser amount.


The big winning bet by Dart could presage a more aggressive tack by vulture funds, if Greece is forced to restructure its bonds a second time.

No. Not Greece. Portugal. And Ireland. And Spain. And Italy.

In other words: buy PIIGS UK-law bonds. Sell all other bonds. Just as we suggested on January 22.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ivars's picture

Seems that knowing the date of Greece elections was very important for markets:


PR Guy's picture

Knowing the date of the next scheduled Greek bank holiday might turn out to be more important! It's Whitsunday - the first weekend in June.

Tortfeasor's picture

Pray tell which Greek government body would/could issue such a decree? They have no government.

PR Guy's picture

It's the church that tells you when Whitsunday is - I thought you guys had God in Ameriky - and you don't mess with the Greek Orthodox Church

GetZeeGold's picture



They're trying to keep the dates of the revolving elections secret....that way no one can pin the blame on anyone.


CrashisOptimistic's picture

It's not the certainty that goosed futs.

It's the extra week.  There was a lot of talk of June 10.

June 17 gives the EU an extra week to get the bribes in place at Szyrios and Democratic Left.

PR Guy's picture

CAN ANYONE TELL ME…. what would actually happen to the Euros held in personal bank accounts by your average Mr and Mrs Spiriadolous in the event of Greece suddenly leaving the Euro?

I presume there would be a ‘bank holiday’ announced (actually, there is one in Greece over the first weekend of June!)  then Mr and Mrs Spiriadolous would wake up on the Tuesday morning to find their €1,000 was now worth 50,000 Drachmas and all Greeks would be told to take their Euros to the bank to swap them for new Drachmas (yeah, like that’s going to happen)….

…..but what happens to the digital Euros that were held in their bank account? Do they just ‘disappear’ or is the Greek government effectively swapping them for new Drachmas and they get to keep all the Euros?

I presume in this instance, all Greek banks accounts would be hit (e.g. businesses whether Greek or foreign, institutions, charities, foreign governments?) or would some be immune (e.g. local bank account of a foreign consul)?

I have asked around but seem to be getting different answers from different people. There must be some laws/rules/precedents somewhere?

I presume that if people in other Euro periphery countries saw that peoples' bank accounts in Greece could be forcibly converted and they would lose their Euros it would start a major bank run in those countries as everyone started pulling Euros cash out to keep under their mattresses and it all becomes a bit of a self-fulfilling prophecy?


And how would Greek bank bondholders be treated? Favourably is my guess.

Aziz's picture

As far as I see it, this is pretty much it, euros redenominated and swapped out as ND, and of course whatever euros the Greek government can scrimp will come in very handy in Greece's attempts to pay UK-jurisdiction bondholders. The various details will be worked out proportionally according to the Greek government's leverage in screwing various money-holders and creditors. Greek citizens at the bottom of the pile, of course. 

Zero Govt's picture

"..what would actually happen to the Euros held in personal bank accounts by your average Mr and Mrs Spiriadolous in the event of Greece suddenly leaving the Euro'"

a highly relevant question that, if there were any Euros still left in Mr & Mrs Spiriadolous' bank account

youngman's picture

and that 50,000 Dracmas will instantly devalue again.....it will take a few months to settle down and a few years to calm down to where you might want to visit....for a very cheap vacation....if its safe enough

insanelysane's picture

It will get vaporized Corzine style with the excuse, "Things were really chaotic in those last few days."  This is why the Greeks are taking their money out, in Euros, and hopefully exchanging them for USD or some other currency, maybe GBP.  The Euro is going to take a hit when Greece exits the Euro.  It may only be a short term hit because imho the Euro is stronger without Greece.

Sudden Debt's picture

well, hold onto your pants because I've heard that they're actually changing it for roubles. Morons... greeks and money... it just don't mix...


PR Guy's picture

Yeah, I heard they were changing it and posting it to relatives abroad. Problem is, like most postal workers, the guys working in the Greek post office have these hand scanners that can tell you when there are currency notes in the envelope. Not much cash gets through. The guys in the British post office are the most effective in the world at hoovering up cash sent in envelopes.

CrashisOptimistic's picture

This mantra of "leave the Euro" pounded out (mostly by the EU to influence the election) is absurdly hypothesized.

There is no mechanism in the EU treaties for forcing a country out.  There is no mechanism for a country leaving voluntarily.

There Is Nothing For Greece To Gain Leaving The Euro.

There is something for them to gain by defaulting on the debt held by the ECB, EU and IMF, but why in HELL are people thinking that equates to leaving the Euro?  It's not an inevitable sequence.

They could not make payments and continue with life.  They will have to cut spending, but they'll cut it less than what they have to cut if they still service debt.  So . . . do that.  Don't pay the debt, cut spending, and still use the Euro.  Why not?

Al Huxley's picture

They're relying on perpetually issuing more debt to pay the bills.  The only way they can do that is if they can print their own money and devalue.  The idea that they'll 'cut spending' is what the previous lenders got suckered into when they bought Greek bonds originally. 

Seb's picture

So what are you saying? They will borrow euros and pay back newly-printed drachmas? Who will accept drachmas instead of euros?

philipat's picture

Any Greek who still has any euros in a Greek Bank must be monumentally fucking stupid. I mean , how much notice do you need? Most private Greek wealth is either in London property or in Switzerland. The small change is under the mattress.

To answer your question, any euros that can be nailed down would be converted to New Drachma at a (Very temporary) initial rate at parity. Within days, the New Drachma would be at 15 euro cents. No austerity there. Fuck off Germany with your free money. Come to think of it, maybe they are monumentally fucking stupid?

Captain Benny's picture

The same goes for Americans.  Any American who still has federal reserve notes in an American bank must be monumentally fucking stupid.  I mean, the writing is on the wall that we're next after the Euro contagion.  We have at most 6 months before a huge debt ceiling debacle and another downgrade.  The world is already rushing into Gold, except that CNBC is talking it down for the masses to flee to shitty yielding treasuries.

PR Guy's picture

I know this sounds insane but there are still €127bn in Greek deposits.

PR Guy's picture

I have to correct myself.... there is €165bn in deposits in Greek banks as at end of March.

PivotalTrades's picture

This is a problem. It would seem that new E's would have to be issued as well.  Kinda Euro's -Greece. Other wise Greeks just hold on to Euros. Electronic E's get converted to ND but paper E's ?

marriedgeordie's picture

well, the greek government will just criminalize holding euros - any greek citizen found in possession of euro cash will be thrown into jail - being in possession of foreign currency notes was a serious offense in the ussr, incidentally.

if you, the greek, have to travel to germany, you must submit an application to purchase euros with the greek finance ministry, and you will be searched and checked at the border (schengen treaty will be tempotarily postponed for this purpose), and all euro cash you will be found in possession of will be confiscated unless you have the permit in your hands that entitles you to carry this cash. the permit will be stamped at the border, of course, to make sure you cannot use it multiple times. on returning to greece, you will have to present your leftover euro cash and the permit again, and include justification for every single euro you have spent abroad.

letitgo's picture

Yes, and the Greek public service is organised enough to put half the population in jail.  Nice one!

marriedgeordie's picture

they will just bring in zee germans to do the job

slaughterer's picture

Note to self: only buy UK-law bonds. 

Ratscam's picture

At what exchange does one buy theses bonds?
Is it possible at all for private investors?

theorist's picture

Yes you can buy these bonds as a private investor. You need to have a broker who deals in these bonds. I think Inreractive Brokers may be able to help here and Saxo Bank. When buying these, you need to be very careful. You need to read the documentation - prospectus and pricing supplement and ensure that the bonds are not only governed by UK Law, but that the issuing entity (like a subsidiary of the government) is fully guaranteed by the government, and that there are no get out clauses. Be very careful what you buy. You can easily buy the wrong paper and not know it. Read all of the details of the bond BEFORE purchasing.

Ratscam's picture

thanks so much, i will check with my Saxo Bank broker

PR Guy's picture

I can help you. Please wire €5m to my account and I will send the paperwork back by return post :-)

Azannoth's picture

It only worked for the BECAUSE 96.6% agreed, if a significant amount held-out Greece could not pay even if it wanted to

spanish inquisition's picture

So if we all buy 1 UK law bond and hold out, we can end it.....

DogSlime's picture

...or you could just sit and watch while it ends all on its own.  Can't save a house of cards mid-collapse.

StockHut's picture

Keynesian economics rocks!

DogSlime's picture

This is Keynesian?

I thought proper Keynesianism required that governments put aside funds when they were running a surplus in order to deploy the funds during recession?

Whatever, those institutions that rolled over and took the haircut must have known this would happen.  If they're in the position of controlling investments and didn't realise that their new Greek bonds were sure to turn into liquid shit, then how can they possibly stay in their job?

I wonder what their bonuses will be this year...

fonzannoon's picture

Who are these dart people?

BlueCollaredOne's picture

Just another psychopathic, ogligarch family who because of their money gets to play by different rules than us.



They did the same shit to Argentina


LetThemEatRand's picture

Red Solo Cup.

I'll fill you up.

Proceed to party.

Fish Gone Bad's picture

The Darts apparently did their homework.  They may very well be psychopaths, but they apparently did their homework while the world was watching TV and getting fat.  I think I might like to eventually know this family.

virgilcaine's picture

Is gold just another levaredge play?  

DogSlime's picture

That's a really horrible picture.   I better not have a cheese sandwich before bedtime... don't want to meet one of those in a nightmare :P

spanish inquisition's picture

If they ever create a satirical graphic artist contest on cable and have a speed round... I guess they should just send you the money now....

the not so mighty maximiza's picture

thats hilarious, i can't stop laughing and everyone is looking at me funny


slackrabbit's picture

The Pussies willl hold their manhood cheap

Mercury's picture

More like:


 Vultures +42
Lemmings -90

duckduckMOOSE's picture

Okay, is there a UK-Law Bond ETF?  :-)

JasperNewtonDaniel's picture
"Never give in, never give in, never; never; never; never - in nothing, great or small, large or petty - never give in except to convictions of honor and good sense”- Winston Churchill


I think that applies to all of the non-domestic law bonds of the PIIGS.  They will beg, then plead and then threaten but you will get paid if you hold out.  They love the Euro more than they love their freedom.  The precedent is set.  Nerer give in, never, never, never, never!

youngman's picture

Yes this just "cost" the other PIIGS trillions...but of course they don´t have the cash...they will just borrow and print it