Navistar International Corp. bond yields are rising while thoseof other U.S. junk-rated truckmakers fall as investors penalize itfor an engine design flaw and Carl Icahn expands his influence inthe industry.

Yields on its notes are up 2 percentage points this year asthose on the 20 most-indebted high-yield automotive companies fall,according to Bank of America Merrill Lynch index data. Icahn, whoowns 14.8 percent of Navistar's shares, is offering $3 billion forOshkosh Corp. after a failed bid last year prompted speculation ofa merger between the two companies.

Navistar, which spent $600 million to design engines that failedto meet emissions rules, is paying Cummins Inc. for replacementtechnology to reverse a forecast $325.4 million annual loss in theyear ended Oct. 31. Liquidity has declined for four straightquarters, and the Lisle, Illinois-based firm sold $200 million ofequity last month to bolster cash.