Pacific Investment Management Co. warns the credit loss cycle is imminent, driven by heavy AI spending that could widen economic disparities and impact lower-quality borrowers. The firm anticipates a resurgence in defaults and significantly higher losses in leveraged and private direct lending, citing borrower strategies like maturity extensions and payment-in-kind structures.

PIMCO CIO Daniel Ivascyn warns a sustained credit default cycle has begun as AI-related debt issuance hits $100 billion per quarter, pressuring lower-rated

Pacific Investment Management Co. warns the credit loss cycle is imminent, driven by heavy AI spending that could widen economic disparities and impact lower-quality borrowers.…