NEW YORK May 12 Junk bonds, which have done
well this year, look like the most promising short trade the
bond market has to offer, prominent investor Jim Rogers told
Reuters in an interview on Monday.
Rogers said the group's narrow spreads made it an attractive
target relative to other types of bonds. He added that he is not
making the trade himself without giving further details.
Barclays' U.S. junk bond index has risen 3.98 percent so far
this year, faring somewhat better than safer investment-grade
issues tracked by Barclays' Aggregate bond index which has
increased 3.02 percent.
The Bank of America Merrill Lynch junk bond index shows the
difference, or spread, between junk bonds and benchmark
Treasuries has shrunk dramatically this year, though not quite
down to the record tight levels seen in 2013. The BAML index
showed junk bonds are holding about 200 basis points spread over
Treasuries, down from 298 basis points since the start of the
In an interview with Reuters Insider, Rogers also said he
was looking to add to his Russia holdings, saying the market was
"cheap, hated and massive" amid tension between the country and
In March, Russian President Vladimir Putin seized and
annexed Ukraine's Crimea region, prompting sanctions from
Western governments. The Russian stock market
subsequently took a beating, falling more than 20 percent
peak-to-trough, though it has since rebounded off those lows.
The European Union on Monday announced further sanctions
against Russia, which Rogers said would have little effect on
the situation. He added that there was "very little chance" it
could escalate into military action between the United States
Rogers, who is the chairman of Beeland Interests and Rogers
Holdings, also said that while the S&P 500 was near
record levels, it didn't mean equities were overstretched.
However, he echoed a common theme among investors these days by
saying that high-growth names, as in the social media and
biotech space, were overvalued.
"Tesla is not for me," he said, referring to the
volatile stock of the electric car maker, which is up about 23
percent so far this year.
(Reporting by Ryan Vlastelica and Richard Leong)