An article in Advisor Perspectives gives an overview of comments by DoubleLine Capital chief investment officer Jeffrey Gundlach regarding the corporate bond market.

In a podcast last November, Gundlach reportedly argued that the corporate bond market is facing excessive debt and an oversupply of bonds, and believes that “spreads and debt levels are out of sync with one another.”

As a result, the article reports, “both corporate and high-yield bonds are at or close to their most extreme levels of overvaluation historically, based on DoubleLine’s proprietary methodology, which evaluates the spreads of those bonds compared to Treasury bonds.

Gundlach argued that, if corporate bonds were rated based on their degree of leverage, “then 45% would be rated junk.” He said these securities have not been downgraded by the ratings agencies because corporations have made statements to calm their fears—something Gundlach describes as “hopeful talk.”

The article cites Gundlach’s opinions on the global stock market and what he calls a “cloudy” outlook for deficit reform. He also asserted that we are a “long way” from a recession, adding that there has never been one without the leading economic indicators going below zero. He did underscore what he sees as “underlying problems in the core of the European banking system,” adding that that China and the European central bank are pursuing a role as a reserve currency.