SVP’s Khosla Sees ‘Maddening’ Uncertainty From Trump’s Moves

The opaque credit markets that distressed and opportunistic debt investors play in are showing greater volatility than what’s apparent in the warning signs that liquid “headline” markets are flashing, according to Victor Khosla, the founder of credit investor Strategic Value Partners.

“The bad stuff — it’s illiquid. There are few buyers, and those few buyers disappear quickly,” he told Bloomberg Television on Wednesday. “Underneath the surface, what you see going on is that the selloff is bigger.”

Investors of debt rated deeper below junk skew toward nonpublic credit or hedge funds that accumulate sizable positions and trade privately.