The Credit Edge by Bloomberg Intelligence Pimco Likes Cruise Lines, Bank Bonds in Tariff Turmoil
Feb 20, 2025
Sonali Pier, a portfolio manager at PIMCO, shares insights from her role at the $2 trillion asset manager. She highlights the attractive debt opportunities in U.S. banks and leisure sectors, particularly cruise lines, amidst current economic turbulence. Caution surrounds retail and auto industries, especially in Europe. The discussion also touches on strategies for navigating creditor conflicts during borrower distress, valuing private debt, and exploring asset-based finance opportunities, all while emphasizing the importance of credit quality in uncertain markets.
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Leisure Sector Nuances
- Within leisure, be selective, as performance varies.
- Lodging is generally strong due to asset-light models, while theme parks and movie theaters lag.
M&A Outlook
- M&A activity is expected, driven by companies needing to monetize and the administration's deregulation theme.
- Higher-for-longer rates and financing costs may slow down large-scale M&A.
Geographic Focus
- Pimco prioritizes U.S. markets due to the "U.S. exceptionalism" theme and the potential impact of tariffs on other regions.
- They prefer developed markets over emerging markets overall.