Bloomberg.com – Junk-Debt ETFs Set Markets ’Abuzz’ After Record Trades
The biggest trades on record in shares of two exchange-traded funds that invest in junk debt are attracting attention to the four-year-old market that allows anyone from banks to retirees fast and discreet access to speculative-grade bonds and loans. The transactions were completed hours before JPMorgan Chase & Co. disclosed $2 billion of trading losses tied to credit derivatives, an announcement that has heightened attention on big trades in debt markets … A May 10 trade brokered by Cantor Fitzgerald LP at 2:42 p.m. in New York created about 4.5 million new shares in the PowerShares Senior Loan Portfolio (BKLN), Bloomberg data show. The trade, which fueled the highest daily volume for the 14-month- old $565.5 million fund, was valued at about $110.3 million. Earlier that day, an investor exchanged as much as 19.7 million shares in the SPDR Barclays Capital High Yield Bond ETF (JNK) for the equivalent of about $779.3 million in bonds, Bloomberg data show. The redemption, the biggest since the $11.2 billion fund was started four years ago, came after the investor had accumulated shares over several weeks, according to Knight Capital Group Inc., which brokered the trade.

Comment

We are highlighting this story because we get the feeling this is not a one-off trade and the final word on this has not been written.

Source: Bianco Research

Category: Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “A Big Junk Bond Trade”

  1. …created about 4.5 million new shares in the PowerShares Senior Loan Portfolio (BKLN), Bloomberg data show. The trade, which fueled the highest daily volume for the 14-month- old $565.5 million fund,…
    ~~

    Scale(s) on bottom Chart should be checked.. the “M” might need to be a “B” ..

  2. [...] Everyone's going nuts over junk bond ETFs.  Uh oh.  (TBP) [...]

  3. Michael says:

    According to some research pieces I’ve read, a big part of the high yield ETF outflow was taken in kind by one institutional investor as a way to ramp up a large high yield bond portfolio. The raw outflow numbers in this particular case may be misleading.

  4. VennData says:

    Comment

    I am ignoring this story because I do not rely on “get the feeling” sort of things. This may not be a one-off trade, or not. It is not actionable, nor is anything else like this actionable because you never know if the “final word on this has not been written.”

    You can predict what whales will do in the market about as well as you can predict anything else in the market. Meaning you can’t.