Ivascyn: Pimco adding high-quality credits including U.S. banks

By Jennifer Ablan

NEW YORK (Reuters) - Pimco's group chief investment officer, Dan Ivascyn, said on Wednesday that the firm is "carefully adding" some positions in high-quality, investment-grade bonds issued by U.S. banks and brokers.

"We are reacting to considerable dislocation in financial markets," Ivascyn said in a telephone interview. "There is a lot of relative value and there are certain names in the banking sector that is moving a lot."

Pimco, a unit of Germany financial services company Allianz SE, oversaw $1.43 trillion in assets as of Dec. 31.

"We are carefully adding some positions in areas that are higher-quality credits and have underperformed such as triple-A CMBS and banks and brokers such as JPMorgan and Wells Fargo," Ivascyn said. "Those are examples of higher-quality names."

Concerns over deteriorating global growth has sent the S&P 500 down about 9 percent since Dec. 31. Triple-C high-yield "junk" bond spreads recently crossing 2,000 basis points.

On Wednesday, Federal Reserve Chair Janet Yellen said in prepared testimony to Congress that tightening financial conditions driven by falling stock prices, uncertainty over China and a global reassessment of credit risk could throw the U.S. economy off track from an otherwise solid course.

Ivascyn said Pimco is expecting at least two rate increases this year and "more than that is a reach."

The Fed in December raised interest rates for the first time since the 2007 to 2009 financial crisis and recession, ending a seven-year run near zero. Policymakers at the time said they expected four more hikes this year, though investors have discounted that amid the risks cited by Yellen and continued low inflation in the United States.

(Reporting By Jennifer Ablan; Editing by Steve Orlofsky)

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