Greek credibility just disintegrated in the eyes of the largest bond fund in Asia, Kokusai. Moreover, Greece will have to pay up when it comes to bond yield if it wants to keep other major investors from jumping ship as well:
Investors including Kokusai Asset Management Co., Asia’s biggest bond fund, sold holdings of Greek debt as the nation, wrestling with the European Union’s biggest budget deficit, had its sovereign ratings cut in December. Fund managers who under their own rules may take part in the issue say Greece must offer the biggest premium over benchmark German debt since 1998, paying a coupon of about 7 per cent.
Kokusai’s Global Sovereign Open fund, the biggest investor in Greek bonds last year among companies that make regulatory filings, sold all of its holdings at the end of 2009 in anticipation of Standard & Poor’s downgrading the nation to BBB+ from A-, said Masataka Horii, a co-manager of the Tokyo-based company. Many investors limit the amount of debt of a given rating their funds can hold.
Kokusai was well ahead of the game.