Huge opportunity in high-yield bond market: Pro

While JPMorgan's Jim Casey is "concerned" about the impact of falling oil prices on the high-yield bond market, he said it is also creating a huge opportunity.

Energy companies, which make up 18 percent of the bond market, took out about $350 billion in debt to build out fracking and fracking infrastructure, he told CNBC.

"It's a big issue because obviously as oil prices drop, their ability to generate free cash flow is challenged, so a lot of these bond prices have been dropping fairly dramatically," Casey, global head of debt capital markets at JPMorgan, said in an interview with "Squawk on the Street."

With that free cash flow challenged, some firms could find it difficult to fund exploration and sustain production growth.

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In fact, plunging oil prices sparked a drop of almost 40 percent in new well permits issued in the United States in November, according to data obtained by Reuters.

Oil workers North Dakota
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However, distressed hedge funds are looking at this as a "huge opportunity," Casey said. "Everyone is focused on this."

While some have started to get in on the trade, "a lot of them are looking at this as a falling knife situation, and they are looking for some degree of stability."

However, those who think what's happening in the high-yield bond market is similar to the teleco bubble of the 1990s are mistaken, Casey said.

"There are hard assets here. So comparing oil and gas in the ground to fiber buried in the ground, those are two different things. And oil and gas is always going to have some value at some price," he said.

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As for how the energy debt is affecting the rest of the high-yield market, Casey said there hasn't been too much of a "bleed out" of the market.

"I think what's happening is we're going through a repricing mechanism that will have its own cycle and take place, and eventually we'll have buyers at a price."

Overall, he called the high-yield bond market healthy and noted that while retail investors have pulled out about $13.5 billion, institutional investors are staying in.

"We think the institutional money has got it right," Casey said, pointing out that those who bought during the last selloff, in May 2013, would have seen a return of around 14 percent.

—Reuters contributed to this report.