Power Lunch

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Power Lunch

Strategist Says Market 'Indigestion' May Delay Bond Deals

Matthew Meyer, managing director at AIG Investments, told CNBC’s “Power Lunch” that the bond market now suffers from a metaphorical distress: “We think there’s still some indigestion in the market,” Meyer said Friday. “…We think there could be some more spread widening, but we think there could be some attractive opportunities.”

Time to Buy Junk?

Meyer said he expected First Data’s deal to be pushed back until after Labor Day.

“Right now, the bank loan market is having a hard time digesting deals much bigger than $4 billion or $5 billion dollars, as opposed to the situation about a month or so ago,” Meyer said. “It’s going to weigh on the market until [end of summer].”

Michael Wellheimer, high-yield manager at Eaton Vance Management, said there are a lot of bond deals that have yet to be placed.

“When we have periods of time like that, people tend to pull these deals off the market, wait a little bit, hope that the market re-prices and then try to bring those deals,” Wellheimer said.

“We agree that when these things come to market, to get that marginal buyer in, you’re going to have to see some spread widening to place all these deals,” he added.