FYI: The Bank for International Settlements sees rising debt issuance as potentially destabilizing for global markets, and points to a curious suspect -- index funds.
In a report issued Sunday, the BIS warned that borrowers may be tempted to ignore the interests of their bondholders and take on additional leverage to meet demand from index trackers. That’s because the most widely used benchmarks allot larger positions to companies that have the most outstanding bonds, thereby rewarding companies that become more indebted, the report argues.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-03-11/passive-bond-funds-imperil-stability-by-rewarding-debt-says-bis
