FYI: High-yield bonds and loans may suffer more in a downturn than in previous crises because they’ve become concentrated in funds that allow early redemptions, according to UBS Group AG.
More than 50 percent of high-yield bonds and 35 percent of leveraged loans are held by funds with “significant redemption risk,” UBS strategists Stephen Caprio and Matthew Mish wrote in a note to clients, citing data through the end of last year. Mutual funds have increased their holdings by $1.4 trillion since March 2009, exceeding a $1.2 trillion increase in outstanding corporate debt, according to the report.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-04-15/junk-debt-liquidity-threatened-by-mutual-fund-holdings-ubs-says
