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Greece Is in a Face-Off With Its Bond Holdouts
The New York Times | April 04, 2012 | 10:11 AM EDT

The battle between Greece and the vulture investors is about to begin.

Fresh off the largest debt restructuring in history, the Greek government is preparing to confront a small, well-financed pool of holdout investors who are refusing to swap their bonds and take a 75 percent loss.

These investors, who probably represent about 2 to 3 percent of Greece’s privately held debt, are betting that Athens and its European supporters — contrary to their public pronouncements — will prefer to pay them back in full rather than let the bonds default.

And that, analysts say, would create a dangerous precedent, not only angering the investors who took large losses last month but raising the prospect that Europe is ready to cut deals with hedge funds holding on to risky sovereign debt.

Officials involved in the debt deliberations say that Aurelius Capital Management and Elliott Associates, two well-known distressed debt funds, are among the investors contemplating a holdout strategy.

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