Pimco Predicts U.S. Downgrade

Ratings agencies will respond to nation’s ‘fiscal theater,’ bond manager says.

The sovereign credit rating of the U.S. will be cut as “fiscal theater” plays out in the world’s biggest economy, according to Pacific Investment Management Co., which runs the world’s largest bond fund.

“The U.S. will get downgraded, it’s a question of when,” Scott Mather, Pimco’s head of global portfolio management, said today in Wellington. “It depends on what the end of the year looks like, but it could be fairly soon after that.”

Bond Rallies

Spain’s bonds have rallied over the past week, pushing the yield on 10-year notes down by 16 basis points to 5.47 percent yesterday, the lowest closing level since April.

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