Pimco Buys Struggling Assets To Support Banks Looking To Offload Battered Companies: Report

  • In recent months, Pacific Investment Management Co has spent more than $2 billion to snap up consumer companies that have struggled due to the cost of living crisis, surging inflation, and rising interest rates.
  • The purchases are part of a broader strategy at the firm to capitalize on depressed prices, Bloomberg reported citing people familiar with the matter.
  • The fund has $1.8 trillion of assets under management, making it well placed for such moves but with risks as the global economy is on the edge of recession. 
  • “For this to pay off over the long term, two things have to be true: first, you need to be correct about the investment thesis; and second, you need to have a good handle on liquidity,” said Mara Dobrescu, an analyst at Morningstar in Paris. “Historically, Pimco has been able to do both with a fair degree of success.” 
  • At the end of May, Pimco bought €600 million of loans and €545 million of bonds backing the unsuccessful sale of Wm Morrison Supermarkets Plc
  • Last month, Pimco snapped up €1 billion of loans backing Apollo Global Management Inc’s APO acquisition of Worldline SA’s payment terminals unit, also at a steep discount. 
  • “You buy at a price that fits your view of the credit,” said Noel Hebert, director of credit research at Bloomberg Intelligence.
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