HB FRANKFURT. Greece’s creditors must be adjusted according to estimates of experts of the bond fund company Pimco on losses. It is likely that Greece is to restructure its debt over the medium term, "said Mathieu Louanges, managing director of Pimco parent Allianz Global Investors in Frankfurt on Monday.
This could mean suspending or reducing interest payments on bonds, a capping of the repayment or conversion to papers with more favorable conditions for Greece. But still, the southern European country was instructed to finance current expenditure on loans – and likely after a first debt restructuring is no longer flowing.
"The possible actions of the European Union and European Central Bank to find the right time for a restructuring," said Louanges. The EU has recently put up a 750 billion euro rescue for the common currency, the ECB started the purchase of government bonds.
Pimco has responded to the Euro-debt crisis with a change in its investment strategy. While the Allianz subsidiary continued to invest in securities from € core countries such as Germany, France and the Netherlands, bonds play of so-called peripheral countries like Ireland, Portugal or Greece a smaller role. Instead, the fund company buys bonds from emerging markets increased. Louanges relies on Brazil and Mexico and China, because his assessment underestimated the market appreciation of the yuan so far.
The fight against the debt crisis will employ, according to the bond market professionals the Euro-zone for a while. "The measures for fiscal consolidation will reduce the inflation rate and thus slow the growth in the euro area," he predicted. Many states have modified such as Spain opened drastic austerity programs.
The Federal Government said on Monday she wanted cutbacks even stronger than necessary. The ECB will continue to Louanges assessment or for a longer time to their low interest rates. "The risk of inflation for the euro zone is very low in the coming years," said Louanges. Therefore, he expected no earlier than 2011 with a rate cut by the ECB, "but not very early in the year."