Bloomberg News

BlackRock Is Buying Italian Debt Amid Improved Outlook

October 13, 2011

(Corrects spelling of Nicolas in third paragraph.)

Oct. 13 (Bloomberg) -- BlackRock Inc., the world’s biggest money manager, is buying Italian debt given the improved prospects for a resolution to the euro zone sovereign debt crisis, Chief Investment Officer Rick Rieder said.

“A month ago, policy makers weren’t really reacting to some of the stresses, weren’t talking about bank recapitalization, weren’t talking about putting a blanket of liquidity under Italy and Spain,” Rieder said on Bloomberg Television’s “Inside Track” with Erik Schatzker. Recently, “a number of policy makers have talked about that the time is now. The ultimate outcome we think is going to be constructive and that has sent a breath of fresh air into the marketplace.”

German and French leaders at a meeting on Oct. 9 pledged to devise a plan to recapitalize banks, help Greece and strengthen Europe’s economic governance. German Chancellor Angela Merkel, after meeting French President Nicolas Sarkozy, said Europe will do “everything necessary” to ensure that banks have enough capital.

“There are going to be bumps along the way,” said Rieder, who helps oversee $3.66 trillion at New York-based BlackRock. “We are being very deliberate in terms of how we add financials and Italian debt. But it definitely feels better and there is a tone that has changed.”

Slovakia will vote on Europe’s enhanced bailout fund today or tomorrow, completing the ratification process across the 17 euro countries as the region’s leaders prepare for a summit this month. Party leaders in Bratislava yesterday secured backing for the European Financial Stability Facility in a second vote.

Banks, Insurers

Enhancing the powers of the EFSF, the temporary bailout fund, is crucial for adopting the key element in the strategy to prevent contagion from the debt crisis that has spread from Greece to other countries in the region.

European Commission President Jose Barroso yesterday called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes.

“We’ve been adding to some of the banks and insurance companies in Europe and actually started adding last week some of the financials in the U.S. as valuations became attractive,” Rieder said.

--Editors: Dave Liedtka, Paul Cox

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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