The outflow of junk bonds from the market has increased this week from last week.
From the WSJ: "Prices on bonds issued by lower-rated U.S. companies tumbled to a three-month low this week, according to a Bank of America Merrill Lynch index. Investors yanked $2.38 billion from mutual funds and exchange-traded funds dedicated to junk bonds in the week ended Wednesday, the largest weekly withdrawal since June last year, said fund tracker Lipper. That came on the heels of $1.68 billion that poured out the week before."The reason why? Geopolitical risk and possible borrower defaults. Military clashes in the Ukraine, Gaza, and Iraq right now are causing concern for high-yield bond holders who have seen their yield decrease more than 1% from last summer.
The spread between junk bonds and Treasuries is 3.65 now.
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