Japan Could Face Bond Default

Tres Knippa believes the troubles in Japan are far worse than they seem, and the fund manager has backed up his pessimism in the form of a leveraged short position against Japanese government bonds.

“They’re going to have a default,” Knippa told CNBC on Tuesday during an interview with “Squawk on the Street.”

Knippa, who runs Kenai Capital Management in Chicago, foresees Japanese officials accelerating debt problems in an ill-fated attempt to protect the country from a bond crisis. If the yen weakens enough, Japanese government bond holders won’t hold onto those securities as returns decline along with the yen, he said.

His comments came after Japan’s Nikkei stock index ended Tuesday about 14 percent down for the year. Knippa joins noted hedge fund manager Kyle Bass in his opinion on a looming Japanese debt crisis. driven by a stagnant economy and rapidly aging population.

via CNBC

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