Pimco Cautions on Default Risks That Central Banks Can’t Fix
- Focus on high-grade debt limits protection against defaults
- Digital, green transitions bring more stress for borrowers
This article is for subscribers only.
Asset management giant Pacific Investment Management Co. is warning credit investors that central banks can only do so much to shield them from losses if a pandemic-fueled corporate borrowing spree spurs a surge in defaults.
Companies have piled on debt at a time when they’re also bearing the strain of the transition to digital and green-based business models as well as the impact of the pandemic, said Joachim Fels, global economic adviser at Pimco, in response to Bloomberg News questions after presenting the asset manager’s October secular outlook.