Transformational Investments

Superstructure Teams

Track Record

Social Responsibility



(Code Name: Delta Force)

Summary: One of the largest private owners of Greek government bonds (GGBs), improved Greek government public financial management and launched a $3.8 billion (€2.9 billion) unmodified Dutch auction tender offer for select GGBs.

Background: With GGBs, Japonica discovered systemic misconceptions related to the world believing that Greece sovereign bonds were justifiably rated close to D but based on our research merited an investment grade rating, discovered a massive undervaluation with the GGBs trading in the low teens but with a fair value in the mid-80s, and assembled a superstructure team of over 200 best in sector professionals to create extraordinary value by correcting the systemic misconception though education and convincing Greek key stakeholders to embrace the best practices of public financial management.

Discovering Systemic Misconceptions: GGBs had the most pervasive and largest systemic misconceptions Japonica had ever discovered as in part a result of the Greece government not having proper financial statements (not even a proper balance sheet) that reflected economic reality in combination with superseding political agendas and almost insurmountable siloed fiefdoms within key stakeholders. Balance sheet misconceptions were at the core of a long list of systemic misconceptions, which included but limited to incorrect performance assessment, misleading sector data, misevaluated historical data, non-economic reality balance sheet, non-economic reality income statement, and flawed projections.

Discover Massive Undervaluation: Discovered a low risk high return massive undervaluation with the GGBs trading in the low teens but with a fair value in the mid-80s, and with a low risk downside scenario indicating at least a doubling of investment in the near term. Of note, Japonica purchased its GGBs from those considered to be among the best and brightest bond investors in the world.

Created Extraordinary Value: Building the largest superstructure team in Japonica’s history of over 200 best in sector professionals to create extraordinary value by correcting the systemic misconception through education and convincing Greece key stakeholders, including the Troika and all major Greek political parties, to embrace the best practices of public financial management and a major bond repurchase. Accomplished what was considered impossible by building Greece and peer country government balance sheets by analytical triangulation of over 100 primary and official secondary sources covering up to 20 years of data. See Superstructure Teams example.

Japonica organized major conferences globally that were attended by world leaders that directly challenged the Greece debt myths and educated Greece key stakeholders through free and open debate. The conferences were attended by hundreds including senior individuals across the political spectrum in Greece and Europe. Two of the highest impact conferences were held at CESifo in Munich and the University of Southern California. Additionally, the Japonica team gave hundreds of high impact presentations on public financial management and Greek debt sustainability to organizations including: the American-Hellenic Chamber of Commerce, British Hellenic Chamber of Commerce, CEPS, CIPFA, Economic Council of CDU, EGPA, European Court of Auditors, FEE, Harvard Business School, ICAEW, IIF, IFAC, IMF, INET Oxford, IOBE, ISCTE, London Business School, OECD, PMI Congress, Standard & Poors, and the World Bank.

In recognition of the firm’s expertise, Japonica leadership served as sole Special Advisor to the CEPS Task Force on Government Balance Sheets and received the 2016 William Pitt the Younger Award for extraordinary leadership in strengthening democracy through public financial management.

Investment Performance: The transformational investment in Greek government bonds resulted in an 8.9x investment multiple on capital invested at exit (4.3x on initial funding) and 35% IRR after about 5 years with no leverage. Initial entry price was as low as 11.40 and the average price during the government’s December 2017 liquidity swap was approximately 88. Japonica’s target price for exiting the GGB transformational investment was 85.

The so called cognoscenti believed and espoused publicly that Greece had an impossible to survive amount of government debt and would never even start on the road to best practice PFM.

Related Reading:

  1. Letter: Japonica Partners Investment in Greece Government Bonds.
  2. HBS case study - Greece's Debt Sustainable?
  3. Greek Debt Vastly Overstated, Investor Tells the World, New York Times
  4. Paul B. Kazarian: Licence to Disclose & Q&A Session, The Accountant
  5. Solidarity with Greece Will Render its Debt Sustainable, Financial Times
  6. Paul Kazarian over Greece: US Investor Called Debt "The Lie of the Century," Der Spiegel Online
  7. Bloomberg Interview: Paul B. Kazarian on "Greek Proposal is a Potential Win-Win"
  8. Most Important Reform website dedicated to GGBs and Public Financial Management Reform (PFM)
  9. Dutch Auction Tender Offer Memorandum
  10. Dutch Auction Tender Offer Announcement
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