Greek Government Bonds (GGBs)
Transformational Investment
(Code Name: Delta Force)


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.  Japonica accumulated an 8.9% peak position with a 27% debt restructuring veto position.

Investment Performance

The transformational investment in Greek government bonds resulted in a 37% IRR and a DPI of 4.24x 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.


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 exceeding 230 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.

Japonica refined and created a tool chest of government performance metrics and constructed a supporting glossary to help identify the GGB systemic misconceptions.  Five of the most important metrics were Citizens’ Wealth per person (CW1), Government Total Net Worth as a percentage of GDP, GDP Multiplier/Inverse Multiplier, CW1 Value Created/Destroyed, and CW1 Decade Swing.  As government balance sheets in the Eurozone did not exist, Japonica’s team had to construct Greece and select peer government balance sheets for fiscal years 2000 through 2017.  In sum, Japonica’s research showed that the Greece government had better or comparable key financial position and performance metrics compared to AAA-rated France and other investment grade rated EZ member states.

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 exceeding 230 best in sector professionals to create extraordinary value by correcting the systemic misconception through education and changing the culture based views of 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.

Greece and many of its key stakeholders had a value destructive culture rooted in byzantine government financial management practices including cash-based accounting, anachronistic debt & deficit financial framework, and pervasive contempt for international accounting/auditing standards.   Japonica relentlessly educated key stakeholders on a culture based on the New Zealand model for public financial management (PFM).

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 & Poor’s, and the World Bank.

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

Education through public media is an important tool for our transformational investments. Japonica consistently and repeatedly went both vertically and horizontally within media organizations from fact checker to editorial boards.  For example, our GGB related public service education campaign was both global and micro-focused, and generated more than 3 billion gross impressions.

Breaking down professional silos, Japonica cross-applied technologies to new applications, including public financial management (PFM) best practices and the full system of New Zealand PFM, to discover hidden insights into GGB value and government improved financial performance.   Japonica worked with government ministry personnel in Greece and the EU to advance best practice technologies in accounting, financial reporting, pension analytics, and balance sheet management.  By the final year of Japonica’s GGB investment, three Greek prime and deputy prime ministers, several senior-most members of the Ministry of Finance, and senior members of all major political parties had publicly supported PFM for the Greek government.  An EY report commissioned by a Japonica affiliate found Greece government monthly financial reporting had become the best among Eurozone member state peers based on quality and availability of information, even outranking Germany and France by about two to one.  And, the Greek Government chief accountant won the William Pitt the Younger Award for good government accounting in 2018.  At the EU level, the European Union now has full financial statements prepared based on International Public Sector Accounting Standards.  And, the German Chancellor, finance ministry, and their political party’s economic council were supporting aspects of Japonica’s recommended PFM for Greece.

Regarding ESG for Greek government bonds, Japonica innovatively applied its inclusive corporate stakeholder and good governance transformation skills to a sovereign government for the benefit of the entire Greek population and citizens of the European Union.   Over a period of five years, Japonica’s team relentless educated Greece key stakeholders on the benefits of public financial management (PFM), especially the New Zealand model.   Japonica’s work educating Greece stakeholders (the public, the Greek government, Greek major political parties, the Greek voters, the major NGOs and think tanks, and other member states of the European Union) included seminal conferences, and an almost countless number of presentations and briefings to the media, rating agencies, and GGB investment related organizations.   Japonica’s highest PFM goals were to reduce poverty/inequality, improved public and private sector borrowing terms, jump start economic growth, and increase Greek government total net worth thus increasing Citizens’ Wealth – the most important government financial performance indicator.

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Japonica is not a fund and does not provide investment advice.