The decline in junk bonds is putting pressure on higher quality corporate debt in a "daisy chain" that started with the troubles in the energy sector, billionaire distressed asset investor Wilbur Ross said Tuesday.
"There are no bids for the energy bonds. So if you have a liquidity need, you've got to sell something that there's a bid for. That's starting to bring down the rest of the market," he told CNBC's "Squawk Box," joining a growing list of high-profile investors, including Carl Icahn and Bill Gross, warning about the potential impact of a meltdown in the high-yield market.
Fitch Ratings said high-yield issuers have posted at least $1.5 billion in defaults every month for 13-straight months — that's just one month short of the streak at the peak of the 2008 financial crisis.
Companies are running out of time, Ross said, and with the Federal Reserve apparently ready to hike interest rates there are fewer options for cheap refinancing as $1.4 trillion of debt is about to come due.
"You have a wall of maturities starting in 2018, building up through 2021 [and] 2022," he said.
Ross, who's made his fortune scooping up distressed assets, said he's buying now. "We've been buying the busted bonds of some of the smaller exploration production, the shale people, because they can turn it on and turn it off."
BlackRock's iShares iBoxx $ High Yield Corporate high-yield exchange-traded fund (HYG) declined again Monday. The ETF was down 12 percent for the year ahead of Tuesday's trading.