FYI: (If link doesn't work, Google article title.)
fresh piece of Citi research lands on bond market liquidity, which evokes a reminder of those days in late 2015 when a lot of attention was focused on how easy it was to buy and (more importantly) sell corporate debt.
Back then JNK and HYG, the two biggest high-yield bond exchange traded funds, had fallen to their lowest since 2009 after Third Avenue, a US asset manager, said it would shut down its $788m “Focused Credit Fund” after a wave of losses and investor redemptions.
As most corporate debt doesn't trade very regularly, the lack of volume could be a problem should a lot of investors want to withdraw money from mutual funds. The funds would have to sell bonds to raise cash for redemptions, which could crash prices and spark more withdrawals, a process similar to the bank runs of the financial crisis.
The problem failed to materialise, everything recovered and the long boom carried on, however. But did liquidity improve?
Regards,
Ted
https://ftalphaville.ft.com/2018/09/10/1536589635000/Most-bonds-don-t-trade/
