Remember when Michael Milken was known as the junk bond king? No surprise, then, that top credit hedge fund managers featured prominently at the Milken Institute Global Conference this year, presenting a rosy assessment of the investment environment for debt. David Warren, chief investment officer for the $2.1 billion Brevan Howard Credit Catalysts Fund, said there’s an “extraordinary sweet spot” in high-yield bonds. Most don’t mature for several more years, lowering the chance of losses in the short term. “We’re talking about 6.5 to 7 percent yields with very low default rates,” Warren said. He listed some short opportunities in the credit markets as likely to default: Eastman Kodak, MBIA, RadioShack, Residential Capital, Sears and TXU Energy.
