Investors must recognize balance sheets of governments and sovereign risks are a key issue this year, Mohamed El-Erian, chief executive officer of Pimco, said on Tuesday.
"It is the year of sovereign risks. Everyone has to recognize sovereign balance sheets themselves are an issue. Sovereigns are called sovereigns for reasons. Everyone gets influenced," El-Erian, who is also co-chief investment officer at Pimco, told a briefing in London.
Pimco is the world's largest bond fund and its assets under management increased 40 percent to $985 billion in 2009 from a year ago.
Britain has a deficit problem but investors are starting to recognize that it has more options than countries like Greece to adjust fiscal shortfall, El-Erian also said.
"It has a high deficit, however the U.K. has a certain ability to adjust and markets are starting to recognize that.
Unlike Greece, the United Kingdom has more than fiscal policy to adjust.
Adjustment process is easier than when you have only one policy," El-Erian, who is also co-chief investment officer at Pimco, told a briefing in London.
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