Private equity firms and those who invest in their portfolio companies' leveraged finance should prepare for a return to conditions last seen in 1989, when defaults were high even for strong businesses, a top debt provider said at a Financial News conference today.

Speaking at the Private Equity News and Financial News European Leveraged Finance conference today, Robin Doumar, managing partner of mezzanine provider Park Square Capital, said: "Good companies with bad balance sheets will go into default and the price for subordinated debt will be effectively zero. This is a massive difference from today and not seen since 1989 as only companies with really bad operating performance are defaulting."