#10.42 39. PIMCOⓇ 50 Investing in Private Credit 1971 For investment professional and institutional investor use only This information was created for Wyoming State Treasurer's Office and is not intended for public distribution. This material is provided for information purposes only and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. A company of Allianz 2021 Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 949-720-6000#2Disclosures This material (the "Material") is being provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy interests in a fund or any other PIMCO trading strategy or investment product. The information contained herein is proprietary and confidential and may include commercially sensitive information, must be kept strictly confidential, and may not be copied, used for an improper purpose, reproduced, republished, or posted in whole or in part, in any form, without the prior written consent of PIMCO. The recipient of this material must not make any communication regarding the information contained herein, including disclosing that the materials have been provided to such recipient, to any person other than its representatives assisting in considering the information contained herein. Each recipient agrees to the foregoing and to return or destroy the materials promptly upon request. The investment strategies discussed herein are speculative and involve a high degree of risk, including a loss of some or all capital. Investments in any products described herein may be volatile, and investors should have the financial ability and be willing to accept such risks. Interests in private funds are illiquid as there is no secondary market for such fund interests and none is expected to develop. Fund interests are subject to restrictions on transfer. Fees and expenses charged in connection with an investment in a fund may be higher than the fees and expenses of other investment alternatives and may offset investment profits. It should not be assumed, and no representation is made, that past investment performance is reflective of future results. Nothing herein should be deemed to be a prediction or projection of future performance. References, either general or specific, to securities and/or issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Certain current and prior investments may be highlighted in order to provide additional information regarding a fund's investment strategy, the types of investments it pursues, and anticipated exit strategies. The material contains statements of opinion and belief. Any views expressed herein are those of PIMCO as of the date indicated, are based on information available to PIMCO as of such date, and may not have been updated to reflect real time market developments. Statements of opinion are subject to change, without notice, based on market and other conditions. No representation is made or assurance given that such views are correct. PIMCO has no duty or obligation to update the information contained herein. Certain information contained here in concerning economic trends and/or data is based on or derived from information provided by independent third-party sources. PIMCO believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Certain information contained in this presentation constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "target," "project," "estimate," "intend," "continue," or "believe," or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of any investment may differ from those reflected or contemplated in such forward-looking statements. Prospective investors should not rely on these forward-looking statements when making an investment decision. PIMCO 2#3How broad and diverse is the opportunity set in private markets? Residential Asset-based vs. cash flow based Commercial PIMCO Direct origination vs. origination partner SOURCE: PIMCO Refer to Appendix for additional investment strategy and risk information Private Credit Sectors Corporate Highly Diverse Private Credit Universe Performing/sub- performing Consumer Specialty Finance New origination vs. secondary market Distinguishing Characteristics Commercial Specialty Finance Positioning in capital structure 3#4Risk factors can differ significantly across private credit investments Sector Residential Commercial Corporate Consumer Specialty Commercial Specialty SOURCE: PIMCO This information is summary in nature and is not intended to be all inclusive. Refer to Appendix for additional investment strategy and risk information PIMCO Key risk factors Home prices Housing affordability Consumer health Operational risks Real estate prices Idiosyncratic credit factors Corporate earnings Corporate earnings Corporate balance sheets GDP growth Idiosyncratic credit factors Unemployment Wage growth Consumer leverage Adherence to underwriting standards Idiosyncratic credit factors Servicing expertise 4#5Key themes driving the current opportunity set 1 Secular Forces Rise in e-commerce and supply chain evolution Increased propensity to work from home Changing demographics PIMCO Current Themes 2 Dislocation & Distress Pressure on sponsors in segments of leisure/office markets Acute liquidity needs due to upcoming CRE loan maturities. Tight bank lending standards 3 Balance Sheet Frictions Pullback in capital availability Continued build-up of global NPLs Lending gaps in residential and specialty finance markets. As of 30 June 2021. Source: PIMCO There is no guarantee that the Fund will launch or, if it does, that it will produce the desired results. For illustrative purposes only. The views and expectations expressed are those of PIMCO. There is no guarantee that (i) the investment strategies discussed herein will work under all market conditions, (ii) that the market trends discussed will continue, or (iii) that the investment opportunities discussed herein will materialize or produce any level of returns. Refer to Appendix for additional investment strategy, outlook and risk information. 01 5#6Mapping investment themes to sector views Under Over € Under Over Residential lending Strong housing fundamentals Focus on resilient seasoned loans PIMCO ● ● Specialty finance • Growing pipeline in secondary opportunities given balance sheet frictions ● New issuance pipeline slower post-COVID ● Consumer (marketplace, student, auto, receivables) Robust asset-based opportunities (SME, aircraft, NPL financing, etc.) Under Under Over Over Commercial real estate lending Lending opportunities much more attractive post-COVID ● Corporate lending Significant levels of dry powder have compressed returns in corporate direct lending ● Less competition is driving more lender friendly terms Robust pipeline in transitional lending ● At the same time, leverage levels have broadly increased as companies sought liquidity to navigate the lockdowns Focus on special situations with strong asset coverage As of 30 June 2021. Source: PIMCO. For Illustrative Purposes Only and Subject to Change. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. There is no guarantee that results will be achieved. "Investment categories" represents PIMCO's view of private credit sectors. "Outlook Today" represents PIMCO's current views of opportunities in the categories identified over the next 12-18 months, and are subject to change. In addition, such outlook may be materially different over different time periods. Refer to Appendix for additional investment strategy, outlook and risk information. 6#7Corporate lending Capital solutions Theme: Emphasis on complex situations with high barriers to entry Investment background . Given the significant capital formation in middle market direct lending we prefer to focus on more idiosyncratic capital solutions Ability to provide solutions for sponsor backed or sponsor-less corporates with bespoke financing needs Opportunity set spans primary and secondary transactions across jurisdiction, currency, sector and company size Target complex situations with barriers to entry, complexity can be due to any of the following: Structure of the deal Sector bias Size of business ● ● ● ● ● Illustrative Terms Issuer size/ PE sponsor owned Capital structure Contractual term Average coupon Fees/Original Issue Discount Upside features Competition PIMCO Capital Solutions in Private Lending ¹ $25-100mm EBITDA/Typically No Typically Senior Secured 4-5 years Typically LIBOR + 600-900 bps cash pay Typically 1-2 points Upfront fees, exit/prepayment fees & typically equity warrants Limited with deals done on a sole lender basis Middle Market Direct Lending² $10-50mm EBITDA / Typically Yes Typically Senior Secured 5-7 years LIBOR + 500-600 bps Typically 1-2 points Upfront fees Modest to numerous with deals often done in a club Investment strategy / illustrative transaction • Opportunity to provide liquidity to counterparties looking to offload private loans in the secondary market ● As an example, we purchased a first lien term loan to the third largest provider of business process outsourcing from a large alternative asset manager's distressed fund The company was recapitalized in late 2020 and is currently undergoing a turnaround • The fund was selling due to cost of capital considerations given strong performance since the loan was originated As of 30 June 2021. Source: PIMCO. For illustrative purposes only. Past performance is not a guarantee or a reliable indicator of future results. 1 "Capital Solutions" refers to a transaction type for PIMCO. Illustrative Terms for Capital Solutions shown above are based on the characteristics (at the time of underwriting) of this transaction type that exist in PIMCO private funds and were not determined based on a formula or mathematical average. Individual Capital Solutions investments have characteristics materially different than those described above 2 Represents illustrative terms of representative middle market direct lending issuers reported by S&P Global at the time of underwriting. Individual issuances had characteristics materially different from those described above at underwriting, & their characteristics also may have changed materially & adversely post-underwriting. The terms set forth above reflect PIMCO's views of the characteristics of a representative referenced middle market direct loan issuance (at the time of underwriting), & were not determined based on a formula or mathematical average. The investment(s) above represents investments made by PIMCO private funds. There can be no guarantee that the investment identified above will achieve positive results. The investment shown above is presented for illustrative purposes only, as a general example of the types of investments that may be acquired by certain PIMCO private funds, as well as PIMCO's capabilities in sourcing, modeling and managing such investments. PIMCO may invest significantly in asset types not referred to in the above. There can be no guarantee that any PIMCO fund will continue to have access to comparable investments, or that PIMCO will continue to utilize similar strategies or techniques in connection with these investments. The information presented herein is as of a specific date, may have changed since such time and is subject to future change. Refer to Appendix for additional investment strategy, outlook, sample investments and risk information. PIMCO 7#8Corporate lending Long term partnership Theme: Leverage PIMCO's breadth and depth of capital to meet borrowers where they are Investment background PIMCO is one of the largest active fixed income managers globally, managing $2.2 trillion across the risk/return spectrum Our breadth and depth of capital allow us to provide financings to companies ranging from mid-market all the way to large cap This means that PIMCO has the unique ability to serve as a holistic and long term partner to borrowers through time as they grow from private middle market borrowers to tapping capital markets as IG issuers Our business model does not focus on "loan-to-own" strategies but rather emphasizes long-term constructive lending partnerships ● Stock Price ($) $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Company stock price / market cap since initial financing M Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Mar-21 $2000mm CFeb-21 $1600mm $1200mm $800mm $400mm $mm Market Capitalization ($) Investment strategy / illustrative transaction • Opportunity to work with borrowers as a holistic capital provider • As an example, PIMCO originated a loan early in 2020 to an operator and acquirer of franchised businesses • The company has performed well since the onset of the pandemic due to strong management and in Q1 2021 looked to finance another acquisition and re-finance our loan in the public leveraged loan market Given our strong relationship with the borrower we convinced them that having PIMCO provide a thick second lien would help to ensure they could access the market given the strong signal it would send - Stock Price -Market Cap As of 30 June 2021. Market capitalization shown as of time of underwriting 31 March 2020. Source: PIMCO. For illustrative purposes only. Past performance is not a guarantee or a reliable indicator of future results. The investment(s) above represents investments made by PIMCO private funds. There can be no guarantee that the investment identified above will achieve positive results. The investment shown above is presented for illustrative purposes only, as a general example of the types of investments that may be acquired by PIMCO, as well as PIMCO's capabilities in sourcing, modeling and managing such investments. PIMCO private funds may invest significantly in asset types not referred to in the above. There can be no guarantee that any PIMCO private fund will continue to have access to comparable investments, or that PIMCO will continue to utilize similar strategies or techniques in connection with these investments. The information presented herein is as of a specific date, may have changed since such time and is subject to future change. Refer to Appendix for additional investment strategy, outlook, sample investments and risk information. PIMCO 8#9Commercial real estate lending Transitional lending Theme: Post COVID Pullback in Capital Availability Investment background Private transitional CRE lending market has gown exponentially as high quality sponsors seek flexible funding for an expanding array of transitional projects to adapt to new realities Longer trajectory to stabilization may increase the need for bridge lending Balance sheet and liquidity pressures persist as mortgage REITs, dedicated CRE debt funds and other participants face constraints due to operating and liquidity impairments Increasing refinancing needs with ~$2 trillion in pending CRE loan maturities approaching • Path to recovery remains uncertain for certain sectors and likely to create future episodes of dislocation in public CRE markets ● ● Investment strategy / illustrative transaction • Redevelopment project in need of financing to re-emerge post- lockdown as a leading hospitality property PIMCO • Given PIMCO headquarters' close proximity to property, team leveraged knowledge of local real estate and submarket which is in a top tier area of Southern California that has high barriers to entry and high land values ● ● Sponsor has invested notable cash equity in the project and owns local properties which it plans to leverage in order to capture limited demand and cross-sell for incremental demand Sponsor's business plan is to capitalize on period of lower demand created by COVID-19 to complete property improvement plan (PIP) and position property as a key luxury hotel in the area post-COVID As of 30 June 2021. Source: PIMCO. Post the onset of COVID-19 refers to period after February 2020. For illustrative purposes only. Past performance is not a guarantee or a reliable indicator of future results. The investment(s) above represents investments made by PIMCO private funds. There can be no guarantee that the investment identified above will achieve positive results. The investment shown above is presented for illustrative purposes only, as a general example of the types of investments that may be acquired by PIF, as well as PIMCO's capabilities in sourcing, modeling and managing such investments. PIF may invest significantly in asset types not referred to in the above. There can be no guarantee that PIF will continue to have access to comparable investments, or that PIMCO will continue to utilize similar strategies or techniques in connection with PIF investments. The information presented herein is as of a specific date, may have changed since such time and is subject to future change. Refer to Appendix for additional investment strategy, outlook, sample investments and risk information. 9#10Residential real estate lending Newly-originated residential loan acquisition Theme: Continued Pullback in Capital Availability Investment background PIMCO has been active acquiring newly originated non-Qualified mortgage loans with strict criteria to prime borrowers with conservative LTVs PIMCO has also been active in other more idiosyncratic forms of new issue residential lending such as bridge loans or 2nd charge mortgage loans The U.S. non-QM market is poised for growth driven by strong fundamentals and regulatory / policy changes • PIMCO has partnered with a variety of originators since 2014 for purchases of non-QM loans Valuations today supported by rising homeowner equity over the last decade and improved consumer credit profiles ● ● ● Seattle Wa National geo-score profiling Highest Geo Scores Lowest Geo Scores OH Staros perputh csom VA 26 Jense Beach Investment strategy / illustrative transaction Partner with bank and non-bank originators to source forward flow agreement of newly originated residential loans ● . . Non-QM residential loans generally require a certain amount of seasoning before securitization. Certain PIMCO private funds have the flexibility to hold them in whole loan form on a warehouse line. Illustrative Transaction: PIMCO recently sourced $84mm of newly issued Non-QM loans with an average FICO of 725, weighted average coupon of 6.21% and a Loan to Value (BPO) of 66%. Due to its high FICO scores and low LTVs, we believe these types of positions offer resilient returns across a range of economic scenarios. As of 30 June 2021. Source: PIMCO. The investment(s) above represents investments made by PIMCO private funds. There can be no guarantee that the investment identified above will achieve positive results. The investment shown above is presented for illustrative purposes only, as a general example of the types of investments that may be acquired by PIF, as well as PIMCO's capabilities in sourcing, modeling and managing such investments. PIF may invest significantly in asset types not referred to in the above. There can be no guarantee that PIF will continue to have access to comparable investments, or that PIMCO will continue to utilize similar strategies or techniques in connection with PIF investments. The information presented herein is as of a specific date, may have changed since such time and is subject to future change. Refer to Appendix for additional investment strategy and investment summary information. PIMCO 10#11Appendix Past performance is not a guarantee or a reliable indicator of future results. CHART Performance results for certain charts and graphs may be limited by date ranges specified on those charts and graphs; different time periods may produce different results. Charts are provided for illustrative purposes and are not indicative of the past or future performance of any PIMCO product. FORECAST Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not be construed as an estimate or promise of results that a client portfolio may achieve. INDEX It is not possible to invest directly in an unmanaged index. INVESTMENT STRATEGY There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. OUTLOOK Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice. RISK Investments in residential/commercial mortgage loans and commercial real estate debt are subject to risks that include prepayment, delinquency, foreclosure, risks of loss, servicing risks and adverse regulatory developments, which risks may be heightened in the case of non-performing loans. There is also exposure to such risks through investments in mortgage and asset-backed securities, which are highly complex instruments that may be sensitive to changes in interest rates and subject to early repayment risk. Structured products such as collateralized debt obligations (CDOs) are also highly complex instruments, typically involving a high degree of risk; use of these instruments may involve derivative instruments that could lose more than the principal amount invested. Private credit involves an investment in non-publically traded securities which may be subject to illiquidity risk. Portfolios that invest in private credit may be leveraged and may engage in speculative investment practices that increase the risk of investment loss. Private Credit funds may also be subject to real estate- related risks, which include new regulatory or legislative developments, the attractiveness and location of properties, the financial condition of tenants, potential liability under environmental and other laws, as well as natural disasters and other factors beyond the fund's control. Equity investments may decline in value due to both real and perceived general market, economic and industry conditions, while debt investments are subject to credit, interest rate and other risks. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower's obligation, or that such collateral could be liquidated. Collateralized Loan Obligations (CLOs) may involve a high degree of risk and are intended for sale to qualified investors only. Investors may lose some or all of the investment and there may be periods where no cash flow distributions are received. CLOs are exposed to risks such as credit, default, liquidity, management, volatility, interest rate, and credit risk. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be appropriate for all investors. Investing in distressed loans and bankrupt companies are speculative and the repayment of default obligations contains significant uncertainties. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor there is no assurance that the guarantor will meet its obligations. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The current regulatory climate is uncertain and rapidly evolving, and future developments could adversely affect a portfolio and its investments. PIMCO 11#12Appendix This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2021, PIMCO. These materials are being provided on the express basis that they and any related communications (whether written or oral) will not cause Pacific Investment Management Company LLC (or any affiliate) (collectively, "PIMCO") to become an investment advice fiduciary under ERISA or the Internal Revenue Code, as the recipients are fully aware that PIMCO (i) is not undertaking to provide impartial investment advice, make a recommendation regarding the acquisition, holding or disposal of an investment, act as an impartial adviser, or give advice in a fiduciary capacity, and (ii) has a financial interest in the offering and sale of one or more products and services, which may depend on a number of factors relating to PIMCO (and its affiliates') internal business objectives, and which has been disclosed to the recipient. These materials are also being provided on PIMCO's understanding that the recipients they are directed to are all financially sophisticated, capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies. If this is not the case, we ask that you inform us immediately. You should consult your own separate advisors before making any investment decisions. These materials are also being provided on the express basis that they and any related communications will not cause PIMCO (or any affiliate) to become an investment advice fiduciary under ERISA or the Internal Revenue Code with respect to any recipient or any employee benefit plan or IRA because: (i) the recipients are all independent of PIMCO and its affiliates, and (ii) upon review of all relevant facts and circumstances, the recipients have concluded that they have no financial interest, ownership interest, or other relationship, agreement or understanding with PIMCO or any affiliate that would limit any fiduciary responsibility that any recipient may have with respect to any Plan on behalf of which this information may be utilized. If this is not the case, or if there is any relationship with any recipient of which you are aware that would call into question the recipient's ability to independently fulfill its responsibilities to any such Plan, we ask that you let us know immediately. The information provided herein is intended to be used solely by the recipient in considering the products or services described herein and may not be used for any other reason, personal or otherwise. PIMCO CMR2021-0629-1703604 CMR2021-0702-1703604 12