(YAHOO FINANCE) High Yield Spreads: Rich or Cheap?

Carl Icahn recently made some comments at the CNBC Delivering Alpha conference about the High Yield market:

“More importantly, they are overpriced, because if you go down and look at the index — and now I could get into some arcane stuff, but what a lot of these guys do, including BlackRock and the others, is these things — high-yield bonds, as you know, if you trade them, are quite illiquid. And therefore, if somebody wants to buy them, they do what they call CDS. They sell insurance on them. So take the money they are given, buy five-year Treasurys, then they go and they buy insurance from a guy like me. As a result, I personally think the illiquidity increases. So these high yields are extremely illiquid and extremely overpriced.”

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