Private Debt Should Face ‘Full-Blown Default Cycle,’ Pimco Says - Bloomberg.com

Pimco warns that private direct-lending vehicles, which raised record amounts since 2008, have loosened underwriting and are vulnerable to a full-blown default cycle. Recent episodes—such as Apollo limiting withdrawals from its $15 billion private credit fund and record redemptions at other large managers—are already exposing liquidity strains and investor pullbacks. Those stresses increase the likelihood that weaker credit quality and higher leverage could produce widespread losses in a downturn.