That didn’t last long. Less than a year after Pimco praised Brazil’s financial overhaul agenda, the fund manager doesn’t rank it on a list of "reform stories." Why? The government’s decision to delay a comprehensive revamp of the nation’s bloated and inefficient pension system.

“We’re not particularly bullish on pension reform roll-out in the near term,” said Yacov Arnopolin, a Pacific Investment Management Co. money manager in London who includes South Africa, Mexico and Argentina as places where reform is progressing. “Our short list is focused on places where we can see favorable momentum.”

Brazil gave up on putting the pension bill to a vote this month after it called in the military to restore order in the state of Rio de Janeiro, home to the violence-plagued city that is the country’s marquee tourist attraction. By law, changes to the Constitution such as those
envisaged by the unpopular bill can’t take place during a military intervention.

Aiming to reassure investors, the government did create a new priority agenda, including economic proposals such as the independence of the central bank independence and tax simplification measures. That wasn’t enough for Pimco, which nine months ago cited Brazil’s
improving fundamentals, a stable currency and an ongoing reform agenda.

Arnopolin says Pimco does remain overweight in Brazil’s external debt, focusing on corporate bonds and so called quasi-sovereigns. During the past twelve months, Brazilian corporate debt returned about 7.6 percent, outperforming the emerging-market average of 4.8 percent.