As William Gross, the managing director of the bond management company Pimco, put it in his last newsletter, "Firms such as Pimco with large credit staffs of their own can bypass, anticipate and front run all three [rating agencies], benefiting from their timidity and lack of common sense".
"It would be doom — it would be a lot worse than 2009," when the financial crisis caused a sharp downturn in Europe and the United States, said Thibault Prebay, head of bond management at Quilvest Gestion, a French asset manager.
"They talked about the pace of the journey, but they didn't talk about the destination," said Paul McCulley, portfolio manager at Pimco Advisers, one of the nation's largest bond management firms.
"This is basically a reinsurance policy," said William H. Gross, chief investment officer of the bond management firm Pimco.
The city of Chicago and Lincoln Center in New York postponed debt offerings because they would have to pay such high interest rates to investors, said Daniel S. Solender, director of municipal bond management at Lord Abbett & Company.
"The commercial paper market, in terms of the asset-backed commercial paper market, is basically history," said William H. Gross, chief investment officer of the bond management firm Pacific Investment Management Company, known as Pimco.
"It's a terrific thing because there are so few women in charge of financial services companies," said Alexandra Lebenthal, president of Lebenthal & Company, a $5 billion municipal bond management firm.
For two decades Rodriguez and Gross have been developing competing (and complementary) styles of bond management.
Diversify Your Currencies David Rossmiller, head of global bond management at Deutsche Bank Private Banking, says investors should round out their portfolios with nondollar bonds.
But it's an expensive and questionable subsidy, said Philip Condon, head of municipal bond management at DWS Investments, the asset management arm of Deutsche Bank.
Laying a floor underneath local government's credit ratings removes the threat of falling into junk status, an incentive for states to get their budgets in order, said Phil Condon, DWS's head of muni-bond management.
