The Credit Edge by Bloomberg Intelligence Pimco Says Private Credit Doesn’t Pay as Hazards Grow
Oct 17, 2024
Mohit Mittal, Chief Investment Officer at PIMCO, shares insights on the vulnerabilities in private credit, cautioning that current returns don't justify the increasing risks. He emphasizes the deteriorating fundamentals in leveraged credit markets, urging careful strategies. Alongside analyst Steve Flynn, they explore the telecom and cable sectors, discussing potential consolidation and strategies within a challenging economic landscape. Their conversation highlights the need for high-quality investments and the potential pitfalls in today's fragile market.
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Complacency in Credit
- PIMCO manages $1.9 trillion across diverse asset classes, giving them a broad market perspective.
- They see signs of complacency in credit markets and favor high-quality fixed income.
Fixed Income Potential
- High-quality fixed income can yield around 6% over the next three years.
- In a rate-cutting scenario, returns could reach double digits, offering diversification from equity risk.
High-Yield Excess Returns
- Excess returns on high-yield were unusually high from 2009-2024 due to specific market conditions.
- Current tighter valuations and potential limitations on fiscal and monetary policy suggest this may not continue.