The chief investment officer of one of the world's largest bond funds warned that there is a “dangerous” assumption in the credit market. At a time when the Federal Reserve's ability to intervene in the market is limited, inflated ratings may give investors a false sense of security. “Just because a rating agency gives an investment grade rating, it's very, very dangerous to assume that something is investment grade,” Dan Ivascyn, Pinhao's chief investment officer, said in the first episode of the podcast “Odd Lots.” “Lending to low-quality companies is growing too much right now. Also, I emphasize once again that the last major cycle led to loans to households with poor credit quality.” Currently, private equity credit is rapidly expanding, and funds are pouring into this credit market where the banking industry used to be dominant. Some investors rely more on third-party ratings rather than doing in-depth credit analysis themselves. Ivascyn said this is the same as the complacency of the credit market before the crisis.

The chief investment officer of one of the world's largest bond funds warned that there is a “dangerous” assumption in the credit market. At a time when the Federal Reserve's ability to intervene in the market is limited, inflated ratings may give investors a false sense of security. “Just because a rating agency gives an investment grade rating, it's very, very dangerous to assume that something is investment grade,” Dan Ivascyn, Pinhao's chief investment officer, said in the first episode of the podcast “Odd Lots.” “Lending to low-quality companies is growing too much right now. Also, I emphasize once again that the last major cycle led to loans to households with poor credit quality.” Currently, private equity credit is rapidly expanding, and funds are pouring into this credit market where the banking industry used to be dominant. Some investors rely more on third-party ratings rather than doing in-depth credit analysis themselves. Ivascyn said this is the same as the complacency of the credit market before the crisis.