SVP’s Khosla Says Spreads Could Blow Out on Two-Speed Economy

Chunks of the US economy are already in recession and there’s a risk that credit spreads will blow out from the current historic tights, according to Victor Khosla, the founder of credit investor Strategic Value Partners.

Many businesses are in need of refinancing because they’re overleveraged, he said in an interview with Bloomberg Television on Thursday. The firm is tracking 15 deals where firms have borrowings of more than $2 billion and the senior debt is trading below 70 cents on the dollar

“These companies are essentially a zombie company right now,” Khosla said. “We have got to ...