UPDATE 1-PIMCO: Spain downgrade overdue recognition by S&P

(Adds position in PIMCO’s investment portfolios; byline)

By Jennifer Ablan

NEW YORK, April 28 (BestGrowthStock) – Standard & Poor’s downgrade
of Spain’s long-term credit rating is an overdue recognition of
the deterioration in the country’s underlying fiscal situation,
the chief executive of investment firm PIMCO told Reuters.

S&P lowered Spain’s long-term rating by one notch to AA,
still investment grade but just two notches under AAA. The move
follows steeper cuts on Portugal and Greece on Tuesday.

“The rating agency is now catching up and recognizing the
deterioration in Spain’s underlying fiscal situation and the
difficulties that the country now faces in mobilizing large
private financing at low interest rates,” said Mohamed
El-Erian, chief executive of Pacific Investment Management Co.

S&P said in a statement that its outlook on Spain is
negative, indicating a possible further downgrade if the
“budgetary position underperforms to a greater extent than we
currently anticipate.” Spain has the euro region’s third-
largest deficit after Ireland and Greece.

“We initiated early on the sale of Greek, Portuguese and
Spanish exposures on account of our concerns about
deteriorating public finances,” El-Erian said. “We stayed on
the sideline and did not participate in any of the recent bond
offerings by these countries.”

El-Erian helps oversee over $1 trillion in assets at
PIMCO.

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(Reporting by Jennifer Ablan; Editing by Padraic Cassidy)

UPDATE 1-PIMCO: Spain downgrade overdue recognition by S&P