PIMCO CEO sees investment opportunities in distressed credit

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The damage done to the U.S. economy by the coronavirus pandemic will create opportunities for investors in distressed credit, PIMCO Chief Executive Emmanuel Roman said at the Bloomberg Invest Global conference on Tuesday.

Roman is not expecting U.S. gross domestic product to return to 2019 levels until the end of 2021. The next 18 months are therefore a time when investors can secure positions in businesses and credit at low prices, he said.

S&P Global Ratings Research estimates that the global default rate for speculative-grade companies will rise to 12.5% by March 2021, from 3.5% as of March 2020. The path to recovery for some U.S. companies has been and will continue to be aided by the Federal Reserve’s stimulus operations, said Roman, noting that the bank’s pledged support is ultimately more important than what it actually purchases. Issuance of new investment-grade corporate bonds has broken records this year and in May hit $1 trillion, a threshold not breached in 2019 until November.

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wolves are just around the corner waiting for the right opportunity

All Trump companies should be packaged as distressed credit bonds or junk bonds. Sell them to Russian oligarchs

Distressed is anything that can’t be bought by a fed facility right now

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