$1bn shares in Pimco funds set for possible downgrade

Uncertainty_410Around US$1bn in preferred shares issued by five Pimco funds have been placed under review for possible downgrade by Moody’s, the credit rating agency. The shares, with total value of $1.02bn spread across five funds, are currently rated Aaa but could face a downgrade after the rating agency cited concerns about declining asset coverage and secondary market liquidity for some fund assets supporting rated obligations and increased  utilisation of certain derivative instruments in the leveraged investment portfolios. Although rated leverage is currently at modest levels and recent Nav performance has been strong for each of the funds, the recent run up in prices in many of the underlying holdings highlights volatility in the high yield sector,” Moody’s said in a statement. The funds being referred to were the Pimco Corporate Opportunity Fund, the Pimco Corporate Income Fund, the Pimco High Income Fund, the Pimco Income Strategy Fund and the Pimco Income Strategy Fund II. Moody’s explained: “In the past twelve months, the asset coverage levels for these funds have deteriorated significantly from recent highs of approximately 125% to levels that are only marginally above the minimum BMA requirement for their current rating.” ©2011 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.