Pimco Says Private Debt Should Face ‘Full-Blown Default Cycle’
Bloomberg.com • • business
Key Points:
- Pacific Investment Management Co. (PIMCO) warns that direct-lending vehicles, which saw record fundraising after the 2008 financial crisis, have loosened underwriting standards.
- PIMCO analysts Lotfi Karoui and Gabriel Cazaubieilh suggest that direct lending is due for a stress test amid potential sector-specific and macroeconomic shocks.
- The analysis indicates that direct lending, like other leveraged finance segments, will likely face a default cycle that will challenge its resilience.
