NEW YORK, Oct 21 (Reuters) - Billionaire activist investor Carl Icahn said on Tuesday he thinks the high-yield “junk” bond market is still in a bubble despite the asset class’s recent selloff.
“I think the high-yield market is in a bubble,” Icahn told CNBC television. “We do a very arcane product, we buy the CDS (credit default swaps), the insurance, and we buy the CDS on the high-yield versus the Treasuries - the five-year Treasuries. It doesn’t mean I’m right; in fact I’m losing money on it right now. But I think that that is a no-brainer also.”
High-yield corporate bond spreads widened out to 5.08 percentage points over comparable U.S. Treasuries last week, up from a modest 3.35 percentage points as recently as June. (Reporting by Jennifer Ablan and Sam Forgione)