Pacific Investment Management Co.'s Bill Gross said Italy remains in trouble even as a new government is formed to put austerity measures in place.

Italy and neighboring countries have "too much debt and too little growth and too few policy solutions," Gross, manager of the world's biggest bond fund, said in a radio interview on "Bloomberg Surveillance" with Tom Keene from Pimco's headquarters in Newport Beach, California. In Italy "we now have technocrats. But does that matter? Will that provide a solution? Probably not to our way of thinking. So Italy and many of its southern neighbors remain in trouble."

Italy sold 3 billion euros ($4 billion) of five-year bonds today, the maximum target, at the highest yield in more than 14 years as Mario Monti seeks to form a government to restore investor confidence in public finances. The Rome-based Treasury sold the bonds to yield 6.29 percent, the highest since June 1997 and up from 5.32 percent at the last auction on Oct. 13. Demand was 1.47 times the amount on offer, compared with 1.34 times last month.

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