Greek bonds: Europe’s hidden gem?
Japonica Partners said it believed Greek debt was “massively undervalued” and should be rated several notches above the junk status assigned by the big credit rating agencies. Greece has been shut out of international bond markets since 2010, when its government borrowing spiraled out of control. It has been rescued twice by the European Union and International Monetary Fund and was forced to restructure its debt in March 2012, imposing losses of more than 100 billion euros on private bondholders. Related: Europe’s recovery is weak, warns ECB But hedge funds — such as Dan Loeb’s Third Point — and other niche investors who bought into Greek debt since the restructuring have made a killing. Yields on Greek 10-year debt in the secondary market have plunged from around 44% in March 2012 to 9%. Japonica’s statement was greeted with derision by some investors Thursday, but the firm that made its name restructuring bankrupt Allegheny International in the early 1990s believes it has spotted an opportunity others may have missed. It claims to have become one of the larger, if not the largest, holder of Greek government bonds, and has hired a former senior executive from Norway’s oil fund — one of the world’s biggest investors — to help manage the portfolio. Related: Investors embrace European stocks “Greece is one of history’s most extraordinary sovereign rejuvenations hidden in plain sight by pervasive systemic misperceptions,” Japonica said, adding it expected yields should break below 5% in 2014. It’s a bold prediction but Japonica may have a point. Greece’s headline economic data and social crisis remain as depressing as ever, and it may yet need another 10 billion euros in support. Still, the government is on track to deliver a primary budget surplus — stripping out the cost of servicing its massive debt this year — and hopes to return to the bond market in the first half of 2014. And the first green shoots of growth may be emerging.
And the shutdown has little direct impact on specific transatlantic relations. But it does add to a sense in Europe that the US is bogged down and focused elsewhere, even as discontent over governance is equallydiscernible on both sides of the Atlantic. RECOMMENDED: Think you know Europe? Take our geography quiz. It fuels an already confused debate when it comes to the future of transatlantic relations, says Ian Lesser, senior director for foreign and security policy at the German Marshall Fund of the United States in Brussels. Europe is already worried that the US is pivoting to Asia, and what this would mean for European strategic interests…. [The shutdown] will also reinforce existing European anxieties about a more inward-looking, less activist US. The Obama administration has acknowledged the global impact of the shutdown. It does have an effect on our relationships around the world and it cuts straight to the obvious question: can you rely on the United States as a reliable partner to fulfill its commitments to its allies? Defense Secretary Chuck Hagel said to reporters this week. It does cast a very significant pall over America’s credibility to our allies when this kind of thing happens. A loss of confidence in the US? While a long-term shutdown would impact the global economy and thus Europe, it doesn’t directly mar transatlantic policies, such as the trade agreement negotiations that are underway. But it is the expression of a deeper problem of failed checks and balances that will impact American ties with Europe, says Josef Braml, a transatlantic expert at the German Council on Foreign Relations in Berlin. If the superpower has no room to maneuver, it will have to shift burdens to foes and friends, he says, which will then create a wedge. “We already see it in security policy, Dr. Braml says, especially the waning US commitment to NATO and its focus on Asia. Europe and especially Germans have to think of how they take care of their own security . It’s not that Europe is a stranger to political crisis.
Continental Europe stays on top at Seve Trophy
Paul Casey and Simon Khan provided early momentum with a 3 & 2 win over Continental Europe’s Mikko Ilonen and Thorbjorn Olesen, while David Lynn and Scott Jamieson followed with a 1-up triumph over the Italian duo of Francesco Molinari and Matteo Manassero. Molinari and Manassero appeared to have another Continental Europe victory in their sights, as they held a 2-up lead with five holes to play, but Lynn and Jamieson rallied, tallying birdies at the 14th and 17th to square the match entering the last, where Jamieson drained a 6-foot birdie putt for the comeback win. “There is just a fraction of disappointment. We let a point go with the Italians; they had the match under control until the very end,” said Continental Europe captain Jose Maria Olazabal, who kept his pairing the same over the first two days. Jamie Donaldson then posted four birdies and an eagle in GB&I’s third win of the day, as he and teammate Marc Warren ousted Thomas Bjorn and Miguel Angel Jimenez, 4 & 2. “The golf that was played was beautiful; Jamie Donaldson was 9-under on his own,” said GB&I captain Sam Torrance. Aside from Colsaerts and Fernandez-Castano, the only other duo to notch a win for Continental Europe was Joost Luiten and Gregory Bourdy, who outlasted Tommy Fleetwood and Chris Wood, 1-up. Luiten and Bourdy nearly squandered a 3-up lead with four holes to play, but they held on for the win when both Fleetwood and Wood missed birdie putts inside 12 feet at the last. Colsaerts and Fernandez-Castano, who have yet to trail at this event, birdied four of their first six holes Friday, with the latter running home a 10-footer at the sixth to go 4-up. Lawrie and Gallacher briefly reduced their deficit to three with a birdie at the par-5 seventh, but they would get no closer, as Colsaerts and Fernandez- Castano birdied three of their next four holes, capped by Colsaerts’ 15-footer at the 11th, to take a commanding 6-up lead. The Continental Europe standouts then parred two straight to wrap up the convincing victory.