“One cockroach does not a trend make,” according to Marc Pinto, senior analyst at Moody’s Ratings, in response to Jamie Dimon’s controversial comments earlier this week.
Pinto, who is the ratings agency’s head of global private credit, said that there is little evidence of a systemic issue that could trigger a broader financial crisis, despite recent concerns over bad loans.
“When we dig deeper here and look to see if there’s a turn in the credit cycle, which is effectively what the market seems to be focusing on, we can find no evidence,” Pinto said in an interview on CNBC’s ‘Squawk Box’. “Now that’s what we’re seeing today. That could always change. But if we look at the asset quality numbers that we’ve seen over the last several quarters, we’re seeing very little deterioration at all.”
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There have been jitters around the credit markets recently, after the collapse of auto parts maker First Brands and the separate bankruptcy of auto lender Tricolor Holdings, which both left a wide range of lenders – including banks and private credit firms – exposed.
JP Morgan boss Dimon said earlier this week on the bank’s earnings conference call that “when you see one cockroach, there are probably more,” suggesting that there will be more credit losses to come.
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However, private credit stakeholders, including Blue Owl Capital boss Marc Lipschultz, have defended the industry and said that the scrutiny should instead be on the banks which led the loan processes in these cases.
Moody’s Pinto told CNBC that default rates on high-yield debt this year have been relatively low, less than five per cent, and are expected to fall to below three per cent in 2026.
By comparison, defaults in high-yield debt were in low double digits during the 2008 financial crisis.
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Meanwhile, the US economy has proven stronger than some expected, Pinto said, despite concerns about the jobs market and the impact of tariffs.
“With respect to GDP growth, we’re doing much better than many people thought just six months ago,” he added. “So again, the credit conditions, looking at GDP growth as well as an expected decline in interest rates, we feel the credit quality is in a pretty good place today and potentially may improve.”
