European policymakers are not ready to commit to unlimited bailouts for debt-distressed countries and that includes capping bond yields, Pimco’s CEO Mohamed El-Erian told CNBC.
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T.J. Kirkpatrick | Bloomberg | Getty Images
Mohamed El-Erian, chief executive officer and co-chief investment officer of PIMCO
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Among the many rescue options bandied about for peripheral nations overcome by sovereign debt is a plan for the European Central Bankto buy enough bonds so that interest rates in the affected countries wouldn’t exceed a certain rate.
El-Erian, who helps run the largest bond fund in the world, said such a plan to go beyond the current Long-Term Refinancing Operations likely would meet stiff resistance.
“We suspect that is one of the options, capping yields,” he told “Squawk Box.” “We do not think it is likely to materialize because it is such an open-ended commitment.”
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