Grant's Current Yield Podcast OBSCURING THE CYCLE
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Nov 10, 2025 
Dan Zwirn, CEO and CIO of Arena Investors, shares his expertise on navigating the complexities of distressed and specialty credit. He discusses how leverage masking has obscured the credit cycle, highlighting the risks of trade finance and off-balance-sheet borrowing. Zwirn sheds light on the convergence of private credit and leveraged loans, detailing regulatory fragmentation. He also explores where he sees risk and opportunity today, emphasizing the importance of positioning for potential market stress.
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Cycles Are Obscured By Innovation
- Markets and alternative investments cycle because human behavior repeats: opportunity, overreach, collapse, and revival.
- Post-2008 innovations have lengthened the delay between value loss and its recognition, obscuring the cycle.
Low Rates Pushed Problems Downstream
- Suppressed rates inflated asset valuations from 2013–2021 and rising rates later exposed those excesses.
- The result is slow, multi-year recognition of losses rather than a single acute crash.
Underwrite With Eyes Wide Open
- Do underwriting with open eyes and price or refuse deals based on history and enforceability, not urgency.
- Avoid lending without protective contracts or when borrower behavior signals repeated bad treatment of creditors.