Pacific Investment Management Co. is steering clear of distressed loans hitting the market as the $1.8 trillion private credit sector faces upheaval. Pimco president Christian Stracke told Bloomberg that the firm is avoiding these sales because the loans are "pretty bad." The comments highlight growing caution among major asset managers amid market volatility.

Private credit has exploded in recent years as companies sought alternative financing outside traditional bank lending. However, rising interest rates and economic uncertainty have created stress in the sector. Many lenders are now trying to offload troubled loans, but sophisticated buyers like Pimco are taking a wait-and-see approach.

Stracke's assessment suggests that even deep-pocketed investors see limited value in current distressed credit opportunities. This reluctance could prolong the market's adjustment period and potentially force more aggressive pricing from sellers desperate to exit positions. The standoff between buyers and sellers may continue until clearer economic signals emerge about the sector's health.