Brevan Howard Plans Greek Funds as Bond Rally Signals Revival

(Bloomberg) -- Brevan Howard Asset Management is readying two funds focused on Greece, betting on a recovery in an economy shattered by almost a decade of crisis.

The hedge fund’s products, investing in property and publicly traded stocks, will be managed by Brevan Howard founding partner Trifon Natsis, the company said. The firm is already halfway to its goal of raising about $500 million for the two funds, whose investors will include Natsis and billionaire founder Alan Howard.

While Greece continues to depend on international handouts, a rally in the government’s bonds that sent 10-year yields to the lowest since before its bailout-era underscored confidence that it’s moving toward self-reliance. Natsis said he hopes to capitalize on that.

“After eight years of crisis and recession that’s hit Greece, we’re at a point where the tail risks have disappeared and the country is stabilizing at a low base,” he said. “We anticipate a material uplift in the Greek economy and asset prices."

“The likely political transition over the next 12 to 18 months will add momentum and reinforce that process," Natsis said. Greece’s economy expanded for a third straight quarter for the first time in more than a decade, the government reported on Monday.

On Tuesday, the yield on 10-year bonds fell to 4.8 percent, a level not seen since the eruption of the financial turbulence that resulted in an economic collapse and three international bailout packages. The bond rally, the biggest one-day drop in yields since July 2015, followed a 25.5 billion-euro ($30.3 billion) debt swap, as well as an agreement between the government in Athens and its creditors on Saturday.

“Following the recent liquidity-enhancing operations, the Greek bond market has rallied,” said Lefteris Farmakis, a macro strategist at UBS Group AG, adding that this third program review was likely to be completed faster than previous ones. He expects the bonds’ “strength to extend.”

Brevan Howard is hiring an investment team in Athens and plans to start by February, with Natsis overseeing the team from London. The stocks fund will be long biased investing in a portfolio of six to 10 equities.

The Greece venture represents Brevan Howard’s latest attempts to reverse an investor flight that has shrunk assets by about three quarters since 2013 to about $10 billion. The Jersey-based company is starting several new funds to cut its reliance on the flagship master fund, offering investors a new deal on fees. It’s even considering selling fund services to third parties.

Howard started his investment firm in 2002 with four other traders from Credit Suisse Group AG’s proprietary fixed-income trading desk. The “Brevan” part of its name comes from the initials of founding partners Jean-Philippe Blochet, Chris Rokos, James Vernon and Natsis.

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