Thursday, March 8, 2012

'Gray Market' Crops Up for New Issue of Greek Bonds

Wall Street Journal
March 8, 2012

Greece will give new bonds to private creditors under its proposed debt restructuring in exchange for old bonds. And while the new bonds don't exist yet, that hasn't stopped at least two dealers from trying to make a market in them.

On Wednesday, Swiss bank UBS AG started quoting a "gray market" in new Greek sovereign bonds, according to a person familiar with the matter. Another person said broker-dealer Seaport Group had done the same.

The dealers were quoting "quite a few" of the securities, the second person added, using as a guide details of the debt swap Greece has put on the table for private investors to accept until Thursday evening.

UBS representatives had no immediate comment and a message to Seaport wasn't immediately returned.

The "bid" price for a batch of future Greek bonds due in 2042, or the highest price the dealer was willing to pay, was around 15 cents on the dollar; the "offer" price, or the most the dealer was willing to sell at, was 17 cents on the dollar, the first person said.

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