Billionaire venture capitalist Chamath Palihapitiya says that a looming credit crisis could burn a hole worth trillions of dollars in corporate America’s pockets.
In a new episode of the All-In Podcast, the venture capitalist says that the rapid rise in interest rates over the past year is putting a lot of pressure on companies that heavily borrowed during the height of the pandemic when interest rates were close to 0%.
“There is a looming credit crisis in the United States… The debt wall that Corporate America is about to hit is pretty meaningful… A lot of these companies will have to thread the needle because if rates don’t go down materially in the next 18 to 24 months, these folks are going to be paying rates that they cannot bear.
I think there is a whole portfolio of over-levered companies in real estate and there’s a whole portfolio of over-levered companies in private equity. Those folks will have to get recapped and that will probably cost trillions of capital impairment, but I do think that that can relatively be done without impairing the economy at large.”
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