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PIMCO Warns: Rising Defaults Put Direct Lending at Risk

3/7/2026

Summary

Story summary

Pacific Investment Management Co. (PIMCO) warns direct-lending vehicles face a stress test after underwriting relaxed since 2008.
Analysts Lotfi Karoui and Gabriel Cazaubieilh of PIMCO say defaults are rising, especially in software firms.
Business development companies (BDCs) face liquidity challenges as redemptions are limited.
Last year, PIMCO raised over $7 billion for an asset-based finance strategy targeting insurers and high-net-worth individuals.

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Story summary

Pacific Investment Management Co. (PIMCO) warns direct-lending vehicles face a stress test after underwriting relaxed since 2008.
Analysts Lotfi Karoui and Gabriel Cazaubieilh of PIMCO say defaults are rising, especially in software firms.
Business development companies (BDCs) face liquidity challenges as redemptions are limited.
Last year, PIMCO raised over $7 billion for an asset-based finance strategy targeting insurers and high-net-worth individuals.