(Bloomberg News) Billionaire hedge-fund manager John Paulson told clients he sees a 50 percent chance the euro will unravel, said an investor who listened to the comments.

An event causing a breakup may happen in three months to two years, Paulson said on a conference call today reviewing second-quarter performance, according to the investor, who asked not to be named because the call was private. Paulson, who runs Paulson & Co., said he expects sovereign yield spreads to widen.

Paulson, who posted a 16 percent loss from one of his largest funds in the first half of the year, told clients in February that Greece may default by the end of this March, and said the European currency is "structurally flawed and will likely eventually unravel."

Armel Leslie, a spokesman for the $22 billion firm in New York, declined to comment.

Paulson is seeking to recoup losses after his Advantage Plus Fund fell a record 51 percent last year following failed bets on a U.S. economic recovery.

Paulson said on today's call that his firm has reduced risk at some of its funds, according to the client. So-called net exposure in its Advantage funds, which seek to profit from corporate events such as takeovers and bankruptcies, is now 11 percent; at the Credit funds it's minus 9 percent; and at the Recovery funds, which bet on assets Paulson believes will benefit from a long-term economic advance, it's 31 percent, the investor said.

The Advantage funds had net exposure of 32 percent as of the end of January, the Credit funds were at 27 percent and the Recovery funds were at 55 percent, according to an annual letter sent to clients in February.

Net exposure is calculated by subtracting the percentage of a hedge fund's short positions, or bets on falling securities, from its long holdings, or wagers on rising stocks and bonds.

Paulson told clients today that employee capital represents 60 percent of the firm's funds, according to the investor. It was 53 percent earlier this year, according to the February letter.