Greek debt ruling dangerous precedent: PIMCO's Gross

NEW YORK (Reuters) - Bill Gross, the co-cio and co-founder of bond giant PIMCO, said on Thursday the decision by a major derivatives agency to not declare a credit event on the writedown of Greek sovereign debt sets a dangerous precedent.

PIMCO was one of 15 banks, hedge funds, and asset managers in the International Swaps and Derivatives Association that voted on Thursday against declaring the debt restructuring a credit event that would trigger a payout on credit default swaps. The vote by the ISDA group was unanimous.

Gross, manager of the world's largest bond fund, speaking on CNBC television about the launch of PIMCO's new ETF, said the decision by the ISDA that Greece is not in default on its government bonds should be seen as a "disappointment" to buyers of credit default swaps on Greek debt.

ISDA's decision prevents credit default swap insurance payments from being triggered. The net worth of these contracts is $3.25 billion.

Gross also addressed today's launch of the new Total Return exchange traded fund and said that the ETF will allow investors to gain a better performance than a standard bond index, with yields between 3-4 percent.

Asked about Warren Buffett's point in his annual letter that bonds are "among the most dangerous of assets," Gross said, "fixed income will always have a place, even at a 3-4 percent return."

(Reporting by Sam Forgione; Editing by Theodore d'Afflisio and Andrew Hay)