SVP's Victor Khosla Sees 'Lots of Pressure' in Credit Market

Watch on YouTube ↗  |  May 05, 2026 at 20:51  |  7:10  |  Bloomberg Markets
Speakers
Victor Khosla — Founder & CIO, Strategic Value Partners (SVP)

Summary

Victor Khosla of SVP warns of significant pressure in credit markets due to high rates, rising defaults, and an oil shock. He expects 15-20% defaults in software credit and sees broad distress in sectors like home building, chemicals, and European consumer brands. He advises caution and notes the cycle will take 12-18 months to play out.

  • Khosla highlights 'lots of pressure' in credit from high interest rates and default cycle.
  • Software credit concerns are warranted, with potential default rates of 15-20%.
  • Stress is visible in home building, chemicals, European consumer brands, and real estate.
  • Western Germany may be heading into a recession, adding to European weakness.
  • BDC redemption requests are expected to continue for 12-18 months.
  • SVP has invested $1.5B recently but remains selective and cautious.
  • Khosla sees investment opportunity in operational fixes, not just rebound plays.
  • The overall high yield market is facing compounding headwinds from oil and software.
Trade Ideas
Victor Khosla Founder & CIO, Strategic Value Partners (SVP) 0:16
Credit market under severe pressure.
The credit market is under significant pressure due to high interest rates, a rising default cycle over the last 4-5 months, and an oil shock that compounds existing headwinds. Default rates in 2024-2025 are already 6% per year (Moody's), which is elevated. This environment warrants caution, and distress is broad across sectors.
High Yield Credit Market MED
Victor Khosla Founder & CIO, Strategic Value Partners (SVP) 1:20
Software credit defaults likely 15-20%.
Software credit concerns are warranted, with defaults likely reaching 15-20%, similar to past sector busts like telecom in 2001 (25% default) and oil & gas in 2014 (35% default). Software business models can deteriorate rapidly and go 'off a cliff,' and it will take 9-12 months to identify which companies are viable. He is being very careful with software exposure.
Software Credit HIGH
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This Bloomberg Markets video, published May 05, 2026, features Victor Khosla discussing High Yield Credit Market, Software Credit. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Victor Khosla  · Tickers: High Yield Credit Market, Software Credit