The “sanctity” of bondholders' contracts has been diminished byGreece's pushing through the biggest sovereign restructuring inhistory, according to Bill Gross of Pacific Investment ManagementCo.
“The rules have been changed here,” Gross, co-chief investmentofficer at Pimco, said in a radio interview on “BloombergSurveillance” with Tom Keene and Ken Prewitt. “The sanctity oftheir contracts is certainly lessened. Bondholders have that tolook forward to going into the future.”
Greece drove through its debt swap after cajoling privateinvestors to forgive more than 100 billion euros ($132 billion) ofdebt, opening the way for a second rescue package. Thesubordination of private bondholders to government organizationssuch as the European Central Bank may have added as much as 1percentage point to bond yields, Gross said.
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