Bonds of PDVSA, Venezuela's state oil company, were the most actively traded U.S. corporate securities by dealers, with 120 trades of $1 million or more, according to Trace, the bond- price reporting system of the Financial Industry Regulatory Authority.

Chavez, 57, spoke on state television yesterday for the first time since leaving for Cuba on April 13 to receive radiation therapy for an undisclosed form of cancer, saying that speculation about his health is likely to continue. PDVSA's $6.15 billion of 8.5 percent notes due November 2017 fell 1.16 cents to 86.1 cents on the dollar as of 5:05 p.m. in New York, Trace data show.

U.S. high-yield bonds have returned 0.05 percent since Feb. 29 after gaining 5.25 percent in the first two months of the year, more than the 4.38 percent in all of 2011, according to Bank of America Merrill Lynch's U.S. High Yield Master II Index. Junk bonds lost 7.46 percent in August and September of last year.

'Shock Absorber'

Returns are slowing as a backlash in Europe against budget cuts gains momentum and economists forecast growth is slowing in America.

Dutch Prime Minister Mark Rutte offered his cabinet's resignation amid a revolt against spending cuts. French President Nicolas Sarkozy lost the first round of his re- election bid as the anti-euro National Front won a record share of the vote.

In the U.S., while gross domestic product grew at a 3 percent pace in the last three months of 2011, it will slow to 2.3 percent this year, according to the median estimate of 74 economists surveyed by Bloomberg. Projections for GDP growth this year are slower than the 3.1 percent posted in 2005 and 2.7 percent in 2006 before the recession and financial crisis.

While headwinds that will hinder near-term gains for high- yield bonds are growing, the U.S. economy can still act "as a shock absorber, helping to offset the potential impact caused by changing European sovereign conditions," the JPMorgan analysts led by Acciavatti wrote in an April 20 note to clients.

The JPMorgan analysts forecasted junk yields will decline 56 basis points to 7 percent by the end of 2012.

B Tier

Returns on junk bonds may reach 6.3 percent for the rest of the year, Morgan Stanley's Richmond wrote in an April 20 note to clients, as "modest economic growth" pushes borrowers to trim debt levels, default rates remain below 3 percent and investor appetite for higher-yielding assets increases amid a "mild recession" in Europe.