Pimco Warns a Wave of Defaults Is Coming for Low-Quality Borrowers
Bloomberg.com • • business
Key Points:
- Pacific Investment Management Co. (Pimco) warns that heavy spending on artificial intelligence may widen economic disparities and negatively impact lower-quality borrowers.
- Pimco's top executives, including Richard Clarida, Andrew Balls, and Daniel Ivascyn, highlight in their annual secular outlook report that a credit loss cycle is underway.
- The firm anticipates significantly higher default rates and losses, particularly in lower-quality credit sectors like leveraged loans and private direct lending.
- Pimco suggests that the reemergence of the default cycle could pose challenges for investors exposed to riskier credit assets.