The widespread appetite for liquidity has pushed down yields on the most liquid credit instruments and created value opportunities in less liquid bonds and bank loans, Andrew Feldstein told the CNBC and Institutional InvestorDelivering Alpha conference.
“We’re enthusiastic about less liquid credit, where you can earn between 11 and 12 percent,” said Feldstein, CEO and chief investment officer of Blue Mountain Capital Management.
The market has developed an “obsession with liquidity,” Feldstein said. He attributed the obsession to regulatory pressure and “fresh memories of the financial crisis.”
Mutual funds, which have high requirements for liquidity, now dominate the credit market, Feldstein said.