Pimco’s Andrew Balls talks about the European sovereign debt crisis

The European rescue package has provided an out for long-term investors that had underestimated credit risk in their European sovereign holdings, PIMCO managing director and head of European portfolio management Andrew Balls said.

"There has clearly been a conservative investor base in government bonds, pension funds and other investors that wanted a conservative allocation to government bonds... but have not fully taken into account the credit risk involved in countries like Greece and others.