“We’re clearly in late cycle, but we’re not obviously at the turning point,” says Ariadna Stefanescu, co-head of Permira Credit, in the latest edition of Credit Exchange with Lisa Lee. Permira is a global investment firm with buyout and credit businesses holding nearly €90 billion in committed capital.

The current environment provides an opportunity for different managers to differentiate themselves, says Stefanescu. Not only will there be more dispersion, but some shops will either fold or face consolidation.

“Ultimately, some people will be priced out of the market,” she predicts.

While Stefanescu expects defaults in sub-investment grade debt to increase, she also notes there have been structural changes that have served to reduce the default rate, most notably more pockets of liquidity.