The Credit Edge by Bloomberg Intelligence Pimco Likes Cruise Lines, Bank Bonds in Tariff Turmoil
Feb 20, 2025
Sonali Pier, a portfolio manager at PIMCO, shares insights from her role at the $2 trillion asset manager. She highlights the attractive debt opportunities in U.S. banks and leisure sectors, particularly cruise lines, amidst current economic turbulence. Caution surrounds retail and auto industries, especially in Europe. The discussion also touches on strategies for navigating creditor conflicts during borrower distress, valuing private debt, and exploring asset-based finance opportunities, all while emphasizing the importance of credit quality in uncertain markets.
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Market Complacency vs. Reality
- Corporate bonds and loans are priced for perfection, despite geopolitical risks and inflation.
- Pimco believes uncertainty is high, but fixed income is attractive due to strong yield outlook.
Navigating Tariff Turmoil
- Invest in robust industries with pricing power or barriers to entry, allowing them to manage tariffs.
- Be cautious about retail and European autos due to tariff and competitive pressures.
Promising Sectors
- Pimco favors large US banks due to strong metrics, multinational presence, and potential deregulation benefits.
- They also like lodging and leisure due to resilient consumer demand, particularly in the higher-end segment.