The “sanctity” of bondholders' contracts has been diminished by Greece's pushing through the biggest sovereign restructuring in history, according to Bill Gross of Pacific Investment Management Co.
“The rules have been changed here,” Gross, co-chief investment officer at Pimco, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “The sanctity of their contracts is certainly lessened. Bondholders have that to look forward to going into the future.”
Greece drove through its debt swap after cajoling private investors to forgive more than 100 billion euros ($132 billion) of debt, opening the way for a second rescue package. The subordination of private bondholders to government organizations such as the European Central Bank may have added as much as 1 percentage point to bond yields, Gross said.
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