London-based hedge fund Adelante Asset Management has made a 70 percent gain on a sale of Greek bonds, showing the potential for big profits from betting on a recovery in the fortunes of a country effectively off-limits to investors a few months ago.

Adelante’s deal offers a rare glimpse into the opaque market for Greek bonds, which has been tough to track since the country’s debt restructuring earlier this year.

Since the restructuring, Greek government bond prices have strengthened, allowing Adelante to sell them for around 24 cents on the euro, having bought them for around 14 cents in June, the company said.

A Greek government bond maturing in 2042, for example, is currently trading at around 20.8 cents on the euro, Thomson Reuters data shows.

Other hedge funds have made similar bets.

Third Point, a high-profile New York hedge fund, for example, has been a significant buying of cut-price Greek bonds.

But it is not all upside. Julian Adams, manager of the Adelante Emerging Market Debt Fund, said that the market was “vulnerable” in the runup to a vote on the 2013 Greek budget and structural reforms in November.

“The chances of a Greek exit from the euro would shoot up again if the measures are not passed,” said Adams.

“This is why in the balance of probability they will pass but it will be very tense getting there.”

Adelante’s debt fund, which made a more than 10 percent yield over the past 12 months, still holds 4 percent in Greek bonds.

[Reuters]