Junk Bonds Are Tanking -- Icahn Says Meltdown `Just Beginning'

From Bloomberg.com:

A day after a prominent Wall Street firm shocked investors by freezing withdrawals from a credit mutual fund, things only got nastier in the junk-bond market.

Prices on the high-risk securities sank to levels not seen in six years and, to add to the growing sense of alarm, billionaire investor Carl Icahn said the sell off is only starting.

“The meltdown in High Yield is just beginning," Icahn, who’s been betting against the high-yield market, wrote on his verified Twitter account Friday.

Icahn’s comments come as junk-bond investors, already stung by the worst losses since 2008, are the most nervous they’ve been in three years after Third Avenue Management took the rare step of freezing withdrawals from a $788 million credit mutual fund...

The move by Third Avenue, announced on Dec. 9, is the latest omen of stress in a market already beaten down by a prolonged slump in oil prices that has battered the energy sector.

The news came as appetite for risk globally is souring as the countdown to the Federal Reserve’s probable interest-rate increase sparked a sell off in equities and other risk assets...


The weakness in the market comes as credit quality in speculative-grade debt is falling.

For every junk-bond issuer that had its rating boosted this year, two have been downgraded, a ratio not seen since 2009, according to data compiled by Bloomberg.

And companies are increasingly defaulting on their debt.

Swift Energy Co.’s failure to make an $8.9 million interest payment last week raised the global tally of defaults to 102 issuers, a figure last exceeded in 2009, according to Standard & Poor’s...
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Link: http://www.bloomberg.com/news/articles/2015-12-11/junk-bond-fear-gauge-nears-3-year-high-after-third-avenue-freeze