Aug 8 (Reuters) - DoubleLine’s Jeffrey Gundlach said on Friday that the junk bond market is ‘not cheap’ even after its recent sell-off.
Investors pulled a record $7.1 billion from U.S.-based junk bond funds in the latest week ended Wednesday, according to Lipper data released on Thursday.
High-yield bonds delivered a negative total return of 1.42 percent in the week ended Aug. 1, their worst weekly performance in more than two years. Meanwhile, the yield premium investors demand for holding these low-rated bonds shot up by 0.50 percentage point to more than 4.2 percentage points above comparable U.S. Treasury debt. Just over a month ago, that spread had been as low as 3.35 percentage points, the smallest since 2007.
“I don’t see a mass exodus from the junk bond market,” Gundlach said. But he added: “The junk bond market is not cheap.”
Gundlach, who as co-founder and chief investment officer at DoubleLine helps oversee $52 billion in assets, is widely followed for his investment calls including a bet earlier this year that Treasuries were undervalued relative to other sectors. (Reporting By Jennifer Ablan; Editing by Bernard Orr)