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Hedge funds seek reinstatement of €1bn Monte Paschi FRESH bonds
The investors are asking an Italian court to reinstate the FRESH notes and claim about €170m in unpaid interest, after Monte Paschi resumed dividends in 2024.
A group of hedge funds, including Attestor Capital and Polus Capital Management, is reigniting a legal dispute over about €1bn of FRESH notes issued by Banca Monte dei Paschi di Siena, which were effectively wiped out in the bank’s 2017 rescue, according to a report by Bloomberg cited by Hedgeweek.
The hedge funds are seeking to have the FRESH notes reinstated and are claiming around €170m in unpaid interest, with a first hearing in the latest proceedings expected to take place in Milan.
The dispute centers on the Floating Rate Equity-Linked Subordinated Hybrid securities, created as part of a 2008 transaction related to JPMorgan’s acquisition of Banca Antonveneta. Hedgeweek notes that JPMorgan subscribed to a €950m capital increase at Monte Paschi, while a Luxembourg vehicle issued roughly €1bn of FRESH bonds to finance the deal.
Holders previously challenged the rescue restructuring, arguing the legislation used during nationalisation unlawfully terminated the contracts governing the securities. Hedgeweek also says the case returns to court after an earlier Luxembourg attempt was rejected on jurisdictional grounds, and it points to the fact that payments on the FRESH notes are tied to Monte Paschi’s profitability and dividend capacity, with the bank restarting dividends in 2024 after a 13-year suspension.