Rising private credit stress will inflict losses on investors and spur volatility, Jerry Cudzil, portfolio manager at TCW Group, says in the latest Credit Edge podcast from Bloomberg Intelligence. “Default rates are going to pick up in a really material way in private credit,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence Senior Credit Analyst David Havens. “We are currently seeing some real stress,” says Cudzil, who expects “accidents” as documentation weakens and pay-in-kind deals proliferate. Cudzil and Havens also discuss the broader financial markets implications of this turbulence, and how current leverage levels compare with 2007. TCW is underweight corporate credit but sees opportunity in collateralized loan obligations and agency mortgages.

Listen to this episode on Apple Podcasts and Spotify.