Bloomberg News

Peskind Urges Investors to Capitalize on Low Junk Bond Prices

October 24, 2011

Oct. 24 (Bloomberg) -- Jeff Peskind, founder of New York- based Phoenix Investment Adviser LLC, talked about opportunities in the high-yield bond market with Carol Massar on Bloomberg Television’s “Street Smart” today.

The extra yield investors demand to own junk debt instead of U.S. Treasuries rose to 9.1 percentage points on Oct. 4, the highest level since September 2009, according to Bank of America Merrill Lynch index data. Spreads have narrowed to 746 basis points as of Oct. 21.

High-yield debt is rated below Baa3 by Moody’s Investors Service and below BBB-by Standard & Poor’s.

On the bond price decline:

“After this big pullback in terms of bond prices, normally this is associated with a lot of defaults coming. This particular time, bonds went down pretty dramatically.”

On capital structures:

“Today, companies are sitting on a lot of cash. They’ve pushed out maturities for a number of years. Generally these are very healthy conditions.”

On how investors can take advantage of bond spreads:

“The best way for most investors is to just buy an ETF or a high-yield mutual fund. They should try to buy a fund that is not trading at a big premium to its net asset value.”

On which sectors to consider:

“You can buy some of the bigger liquid names in our space that are CCC, like a Harrah’s or Clear Channel bond that we think has significant liquidity.”

“Bonds in some cases are down 20, 30, 40 points over the past eight weeks, which is an enormous move in the credit space.”

--Editors: John Parry,

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net; Carol Massar in New York at cmassar@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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