Spreads May Be Converging Across Public and Private Markets

But Liquidity Is Not, According to PIMCO

Mar. 20, 2026 at 7:40am

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A new report from global investment management firm PIMCO suggests that while spreads between public and private credit markets may be converging, the underlying liquidity in those markets remains quite different, posing challenges for efforts to make private credit more tradable.

Why it matters

The ability to earn an illiquidity premium has been a key driver for investors allocating to private credit. If private credit becomes more liquid and tradable, it could undermine one of the main reasons investors have sought exposure to this asset class.

The details

PIMCO, which has been active in fixed income investing since its founding in 1971, notes that while spreads between public and private credit markets may be aligning, the underlying liquidity dynamics remain quite distinct. Efforts to increase the tradability of private credit face obstacles, and PIMCO warns that making private credit more liquid could risk undermining the very illiquidity premium that has attracted investors to the asset class.

  • PIMCO was founded in 1971 in Newport Beach, California.

The players

PIMCO

A global leader in active fixed income investing, founded in 1971 in Newport Beach, California.

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The takeaway

This report from PIMCO highlights the delicate balance between public and private credit markets, and the challenges of increasing the tradability of private credit without undermining the key benefits that have drawn investors to the asset class in the first place.