Published by Global Banking & Finance Review®
Posted on April 2, 2025
3 min readLast updated: January 24, 2026
Add as preferred source on GooglePIMCO has lent $6 billion to emerging market governments, offering higher returns and better protections, with countries like Panama and Saudi Arabia as key borrowers.
By Yoruk Bahceli
LONDON (Reuters) - Bond giant PIMCO has privately lent nearly $6 billion to emerging market borrowers, mostly governments, this year alone, securing higher returns and better lender protections, its head of emerging markets portfolio management said on Wednesday.
That is already nearing the roughly $8.5 billion PIMCO lent last year in 27 deals, Pramol Dhawan told Reuters, out of a total of around $25 billion it has provided in recent years.
For emerging markets wary of being caught out by unfavourable changes in broader sentiment, private credit - which is also booming in developed economies - is seen as a more flexible but also less visible way to borrow.
Countries PIMCO has lent to include Panama, the Dominican Republic, Saudi Arabia and Qatar, Dhawan said on the sidelines of a conference in London.
The asset manager lends through loans or private bonds as well as trades where PIMCO buys existing public bonds at a discounted price that is not disclosed, Dhawan said.
The firm prefers lending to borrowers with low investment-grade or high sub-investment grade ratings, he added.
"We've got both inflows as an asset manager, and we have a large private credit team. We can leverage those two together, find bespoke solutions," Dhawan said.
He said PIMCO could secure a 150 basis-point pick up relative to public investment-grade bonds from the same borrowers, while for the high-quality end of the high-yield market, that can reach as high as 300 bps.
The other advantage of the off-market deals is that PIMCO can write its own lender protection terms known as covenants, which offer it more protection than those on public deals.
Emerging market governments were choosing to pay up for the private debt to secure optionality, particularly following the experience of the COVID-19 pandemic where some emerging markets, especially smaller, riskier frontier markets, were locked out of capital markets, Dhawan said.
Some issuers also do not want to mark down their Eurobonds with a public debt sale, he added.
Giving the examples of Panama and Egypt, Dhawan said the higher-cost private credit extension was a very small share of their debt stack, however, at around 3%.
Demand to lend to investment-grade governments in this way was coming predominantly from insurers, Dhawan added.
"Pretty much every U.S. insurance company that we pitch this to is like: sure. Why not?," he said, as they grow worried about U.S. equity market volatility.
(This story has been refiled to change 'market' to 'markets' in paragraph 10)
(Reporting by Yoruk Bahceli, Additional reporting by Marc Jones; Editing by Dhara Ranasinghe and Alison Williams)
The article discusses PIMCO's increased private lending to emerging market governments.
Private credit offers flexibility and less visibility, with better lender protections.
Key borrowers include countries like Panama, the Dominican Republic, Saudi Arabia, and Qatar.
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