Investors get rid of "junk" bonds fastest pace since September 2005, which is the latest sign that the concern over sovereign debt spread to other credit markets.
Based on data from Lipper FMI, for the week were put about $ 1 billion from the funds of the United States, consisting of high-yield corporate bonds (junk bonds), which is the largest outflow of capital in nearly four and a half years.
As a result, last month there have been major sale of U.S. junk bonds from the time when the stock market hit bottom in March 2009, - said Martin Fridson (Martin Fridson), executive director of Fridson Investment Advisors, which specializes in high-yield bonds.
The difference spreads yield junk bonds and U.S. Treasuries has expanded nearly 100 basis points from 11 January and is now kept at the level of 700 basis points, according to Bank of America Merrill Lynch Index.
"If that corporate fundamentals are improving rapidly, loans are not insured against sovereign risk", - analysts said Morgan Stanley.
"If the result of public issues would be a fiscal contraction and higher tax rates, the probability of a second wave of recession is just above. Such an outcome is set aside pothole, if not derail the positive trends in corporate performance. "
Junk bonds issued by companies with credit ratings below investment grade, soared in price in the past year as investors poured more than $ 30 billion in bond assets in search of higher returns at a time when official interest rates were at historically low levels. Demand for higher-yielding assets has led to record issuance of bonds, allowing even hopeless companies to refinance.
That meant fewer corporate defaults than feared, allowing the first investors to get up to 50% yield from a garbage stock.
Nevertheless, last week, the U.S. high-yield bond funds and stock assets experienced outflows of $ 984 million, which became the fastest to 28 September 2005, according to Lipper FMI. The exodus has prompted a four-week average to the downside for the first time since March.
Net nominal value of bond funds monitored by Lipper, fell to $ 1.6 billion per week in the investigation of market declines, the biggest since November 2008, when was the peak downturn.
"Signals whether the outflow end of the rally junk bonds, depends on whether the financial problems of the Greek resolved or postponed," - says Fridson. - "If the issue persists or worsens, it will be bad news for everyone" risky "assets, including high-yield bonds."
But he added: "People may be surprised how quickly the market would go back (if the sovereign risks sag), as investors are still very expensive to stay in cash.
Based on data from Lipper FMI, for the week were put about $ 1 billion from the funds of the United States, consisting of high-yield corporate bonds (junk bonds), which is the largest outflow of capital in nearly four and a half years.
As a result, last month there have been major sale of U.S. junk bonds from the time when the stock market hit bottom in March 2009, - said Martin Fridson (Martin Fridson), executive director of Fridson Investment Advisors, which specializes in high-yield bonds.
The difference spreads yield junk bonds and U.S. Treasuries has expanded nearly 100 basis points from 11 January and is now kept at the level of 700 basis points, according to Bank of America Merrill Lynch Index.
"If that corporate fundamentals are improving rapidly, loans are not insured against sovereign risk", - analysts said Morgan Stanley.
"If the result of public issues would be a fiscal contraction and higher tax rates, the probability of a second wave of recession is just above. Such an outcome is set aside pothole, if not derail the positive trends in corporate performance. "
Junk bonds issued by companies with credit ratings below investment grade, soared in price in the past year as investors poured more than $ 30 billion in bond assets in search of higher returns at a time when official interest rates were at historically low levels. Demand for higher-yielding assets has led to record issuance of bonds, allowing even hopeless companies to refinance.
That meant fewer corporate defaults than feared, allowing the first investors to get up to 50% yield from a garbage stock.
Nevertheless, last week, the U.S. high-yield bond funds and stock assets experienced outflows of $ 984 million, which became the fastest to 28 September 2005, according to Lipper FMI. The exodus has prompted a four-week average to the downside for the first time since March.
Net nominal value of bond funds monitored by Lipper, fell to $ 1.6 billion per week in the investigation of market declines, the biggest since November 2008, when was the peak downturn.
"Signals whether the outflow end of the rally junk bonds, depends on whether the financial problems of the Greek resolved or postponed," - says Fridson. - "If the issue persists or worsens, it will be bad news for everyone" risky "assets, including high-yield bonds."
But he added: "People may be surprised how quickly the market would go back (if the sovereign risks sag), as investors are still very expensive to stay in cash.
The Financial Times
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