Pimco's Chief Investment Officer warns that the first sustained default cycle in years has begun in the credit market, and the market will face higher losses than it has been accustomed to.

Although the spreads are already near historically narrow levels, “there are undercurrents beneath the surface,” Daniel Ivascyn said in an email briefing compiled from a video statement. With a large volume of debt coming due and a peak in debt repayments approaching, Ivascyn joined Davidson Kempner partner Suzanne Gibbons and Na Wei of Barclays in warning about the rising risk of defaults. Glendon Capital Management founding partner Holly Kim stated on Wednesday that the main issues will focus on leveraged buyout deals from 2021 and 2022 that relied on cheap borrowing.