Marathon Asset Management boss Bruce Richards is gearing up for the next global recession, which he reckons could be less than two years away.

The chief executive officer of the credit hedge-fund firm is planning a new distressed fund to take advantage of the opportunities created by another world slump. It could start raising capital as early as the second half of 2018.

“Are we going to slip into a recession?” Richards said at the Legends 4 Legends conference in Amsterdam last week. “When is our next default cycle? It’s not this year or next year, but possibly in 2019.”

While U.S. stocks are at record levels and corporate default rates are falling, there’s concern that developed nations in particular are creating asset bubbles that could stymie growth. Richards pointed out that the Standard & Poor’s 500 Index also reached all-time highs on the brink of the 2008 financial crisis, and JPMorgan Chase & Co. forecasts slowdowns next year in economies as diverse as the U.S., Japan, China and Germany.

“The next recession, when it eventually occurs, will not be like the last recession,” Richards said.

‘Whoppingly Huge’

Although it will be “mild” compared with the global crash a decade ago, the next downturn will still cause about 15 percent of the lowest investment-grade U.S. corporate debt to descend into junk. For cyclical companies, this could equate to as much as $500 billion of debt, creating “whoppingly huge opportunities” for money managers, Richards said.

“Today, default rates are low,” Richards told an audience of hedge-fund managers and investors at the Amsterdam Eye Museum on Sept. 28. “The trough in default rates means we only have one way to go from here.”

In an interview after the conference, Richards declined to provide more details about the distressed fund he’s planning or to discuss his goals for capital-raising.

Richards also recommended non-performing loans in southern Europe and said Marathon would likely increase the $2 billion of bad loans it has built up in the continent in recent years, mainly from the U.K., Ireland, Germany and France.

Brexit Slowdown

Richards still sees U.K. companies as candidates for investment, despite the uncertainty created by the negotiations to take the country out of the European Union.

“It’s too early to tell when the slowdown will begin in the U.K.” because of Brexit, Richards said. While the country is unlikely to enter a “deep recession,” he predicted there’s an increasing chance of “slow or even zero-type growth rates for two to three years.”