Wednesday, May 16, 2012

Cayman Islands Vulture Fund Cleans Up in Greece

Secretive Dart Bets on Distressed Bonds and Wins 

The Economic Times reports:

When Greece announced Tuesday that it had made a 436 million euro bond payment to the holdout investors who rejected the country's historic debt overhaul 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 have been a particularly awkward time to make things worse by defaulting on a bond payment. 
The real news is where most of that money went. Almost 90 percent will end up in 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 that have a track record of buying the distressed bonds of nearly bankrupt countries - and suing the governments for the money if they do not get paid. Dart and another big vulture fund, Elliott Associates, perfected that strategy during the various Latin American debt crises in years past.

Read more. The story clearly could have legs and hurt pro-austerity politicians in Greece … and in the United States, too. A Cayman Islands-based vulture fund minting money from Greek misery could focus renewed attention on the private equity career--and offshore bank accounts--of Republican Presidential candidate Mitt Romney.