Thursday, May 26, 2011

Harvard Prof Warns Pension Funds Will Take Hits on PIIGS Debt

Harvard's Gita Gopinath,  at a Dublin-based forum -- titled Adjusting to New Realities, warned that (mostly European) pensions -- who are large holders of PIIGS debt -- may be forced to take a loss on their investments as a result of the European sovereign debt crisis. Gopinath stated that the solution to the crisis would likely be for bondholders, including pension funds, to take some form of a loss on their investments, "given the sheer scale of the debt amounts involved."

In attendance at the forum were Europe's largest institutional investors and asset managers responsible for the investment of more than €1 trillion of funds. In a poll, 75% of those in attendance saw a high likelihood of default in the Eurozone within three years.

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