According to the Financial Times, authorities used this week’s €5bn Greek bond issue as an opportunity to punish hedge funds for betting against them.Authorities in Athens told banks handling the sale, “don’t sell to hedge funds.” The authorities were even wary of any bodies that might be a proxy for them, and told banks to avoid sale to them, too.
Of course government bond managers would prefer not to sell their bonds to hedge funds. Ideally, they would sell their bonds to “buy and hold” investors.
But if the strategy was an attempt to entice Greece’s ideal sort of investor, it didn’t really work. Greece’ new 10-year bond attracted hardly any trading on Friday.