Apr. 2, 2010 (Independent) -- One of the world's most powerful investment houses has given notice that Britain's cherished AAA credit rating could be lost within a year, with disastrous consequences for the public finances and the stability of the financial system.
Scott Mather, the head of global portfolio management at the world's largest bond investor Pacific Investment Management Co (Pimco), also said the eurozone's potential joint bailout of Greece with the International Monetary Fund would be ineffective.
On Monday, there was a marked sell-off of Greek government debt and an auction of bonds on Tuesday went badly. The spread between the yield on Greek bonds and German Bunds soared again to 340 basis points. Pimco has previously said that Greece's "initial conditions and demographics are abominable".
Pimco is reducing the weight of UK, US and European sovereign debt in its portfolios. "Miracles are needed in the next six months in order to keep economic growth in the developed world," Mr Mather said. Pimco stated last month that it was keeping its negative outlook on British gilts because of fears of inflation and a further deprecation of sterling.
