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Tags: Investors | Junk | Bond | Funds

Investors Stampede Out of Junk Bond Funds

Thursday, 07 August 2014 06:15 PM EDT

U.S. high-yield bond funds posted a record $7.1 billion outflow in the week ended Aug. 6, according to Lipper.

The withdrawal came after the debt tumbled 1.3 percent in July, its first monthly loss since August 2013, according to Bank of America Merrill Lynch index data. It surpasses the $4.6 billion that was pulled in the week ended June 5, 2013, and brings year-to-date net outflows to $9.75 billion, Lipper data show.

Investors also pulled $1.5 billion from U.S. funds that buy leveraged loans, for the largest weekly outflow since $2.1 billion in the week ended Aug. 17, 2011, according to Lipper. That brings this year’s loan-fund net outflows to $2.3 billion.

The extra yield, or spread, investors demand to own speculative-grade bonds instead of government debt has widened to 4.2 percentage points from 3.35 percentage points on June 23, Bank of America Merrill Lynch index data show.

Leveraged loans and high-yield bonds are forms of corporate debt rated below BBB- by Standard & Poor’s and lower than Baa3 by Moody’s Investors Service.

Loan prices fell Thursday to 98.07 cents on the dollar, the lowest since April 28, according to S&P/LSTA U.S. Leveraged Loan 100 Index. The debt has lost 0.23 percent this month after tumbling 0.25 percent in July for its first monthly loss since August of last year.

© Copyright 2023 Bloomberg News. All rights reserved.


Markets
U.S. high-yield bond funds posted a record $7.1 billion outflow in the week ended Aug. 6, according to Lipper.
Investors, Junk, Bond, Funds
220
2014-15-07
Thursday, 07 August 2014 06:15 PM
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