ECONOMY

Japonica offers to buy more Greek government debt at lower price

Japonica Partners & Co., the U.S. investment firm that last month said it would buy as much as 2.9 billion euros ($3.8 billion) of Greek debt, offered to purchase more of the bonds at a lower price amid concern the nation faces another bout of economic instability.

Japonica said it will purchase as much as 4 billion euros of Greek government bonds, the Providence, Rhode Island-based firm said in a statement today. The firm, run by former Goldman Sachs Group Inc. investment banker Paul Kazarian, lowered its minimum purchase price to 40 percent of the bonds’ principal amount, down from 45 percent a month ago.

The firm said it cut the price it’s prepared to accept because European officials may impose more losses on Greek bondholders, fractures in Greece’s coalition government and a potential 3 billion-euro to 4 billion-euro funding gap, Japonica said in the statement. The “volatile” and “highly illiquid” characteristics of Greek debt means the bonds don’t trade at their true value, Japonica said.

Greek government bonds have dropped 12 percent since May 31, the last trading day before Japonica announced its offer, according to the Bloomberg Greece Sovereign Bond Index. (BGRE) The yield on the nation’s bond due in February 2023 was at 10.85 percent as of 9:46 a.m. London time today, up from 9.39 percent at the close on May 31.

Japonica first announced its plans on June 3, saying it would buy bonds through a tender offer expiring July 1. The investment firm said today it plans to extend the tender period through Aug. 1, according to the statement.

Kazarian founded Japonica in 1988, according to its website. The firm’s previous transactions include the $630 million purchase of Alleghany International and the $250 million initial public offering of Sunbeam-Oster after the maker of home appliances declared bankruptcy, according to the website.

[Bloomberg]