Bond traders 'distrust' Ireland as investment, says Gross
Published 26/03/2010 | 05:00
THE most influential bond strategist in the world, Bill Gross of US fund Pimco, has said markets "distrust'' over-borrowed countries such as Ireland, Iceland and Greece and may look elsewhere for investment opportunities.
Mr Gross, as managing director of the Pacific Investment Management Company (Pimco), has huge influence over what happens on the bond market. Pimco itself is one of the largest mutual funds in the world.
In his latest investment outlook Mr Gross said there was great uncertainty on markets with worries over regulation and debt. He said this was "most evident now in the markets distrust of marginal sovereign credits such as Iceland, Ireland, Greece and a supporting cast of over-borrowed lookalikes''.
He said these countries were forcing what he called bond "vigilantes'' to be more choosy about where they invested their money. "Investors are now questioning the staying power of public monetary and fiscal policies,'' said Mr Gross.
He said bond traders were now choosing the governments that could keep their economies stable. "Can individual countries escape a debt crisis by creating even more debt and riding another rocking horse winner? Can the global economy?'' he said.
Mr Gross said conditions varied but key was whether the country involved could issue its own currency. Also important was the starting position of the country before the crisis began and finally whether the country had a central bank prepared to offer low or negative interest rates.
Mr Gross did not discuss whether Ireland had a good starting position going into the crisis.