| 8.7°C Dublin

Top hedge fund bets on Danish debt crisis

Close

Danske Bank is Denmark's biggest lender

Danske Bank is Denmark's biggest lender

Bloomberg

Danske Bank is Denmark's biggest lender

Owl Creek Asset Management, one of last year's best-performing hedge-fund firms, is betting against Denmark's sovereign bonds in anticipation of a debt crisis, sources told Bloomberg.

The $3.2bn New York-based firm also bought credit default swaps on Danske Bank, the country's biggest lender, founder and investment chief Jeffrey Altman said last week.

Danes owe their creditors 321pc of disposable incomes, a world record that Mr Altman referenced. One catalyst for a debt crisis may be the country's $550bn (€407bn) home-loan industry, the world's biggest per capita, which grew after cheap credit fed a borrowing spree, Mr Altman said, according to the people.

"Analysis both from the central bank and the business ministry show that homeowners' economy is quite robust," said Karsten Beltoft, director at the Danish Mortgage Bankers' Federation. "They can handle pretty large increases in interest rates, so I am not so worried about debt levels."

Kenni Leth, a spokesman for Danske, declined to comment, saying the bank was in its silent period before this week's publication of full-year earnings.

Denmark became Scandinavia's weakest economy after a housing bubble that burst in 2008 triggered a community banking crisis. Danske Bank has lost 135,000 clients in the past 16 months and customer satisfaction is the lowest in at least six years. (Bloomberg)

Irish Independent