_Economy and Finance

Biggest Buyers Retreat from Junk Bonds (Source: Bloomberg, February 15, 2013 ) According to Bloomberg, major institutional investors pulled back from junk bonds as exchange-traded funds (ETFs) experienced record withdrawals, marking the first losses in eight months. The combined value of the five largest junk-debt funds fell 7% from January highs, with State Street’s $11.9 billion fund alone seeing nearly $1 billion in withdrawals over 12 days. Analysts noted that institutions such as hedge funds and banks are shifting away from broad indexes, instead targeting specific bonds. Junk bond ETFs, which attracted $8 billion in 2012 amid strong returns, are now facing outflows as strategists forecast weaker performance in 2013. Prices have declined from record highs, with concerns that valuations are stretched after years of double-digit returns. Prominent investors including Dan Fuss of Loomis Sayles and Howard Marks of Oaktree Capital warned that the market is “overbought” and calle...

Are High Yield Corporate Bond ETFs Worth The Risk? by Daniela Pylypczak on February 15, 2013 Though equity markets may have started out 2013 with a bang as the Dow and S&P both hit multi-year highs, the fixed income space remains rather uncertain. With interest rates expected to stay at near-zero levels for the foreseeable future, investors have found it challenging to find meaningful yields. This task, however, is certainly not impossible as there are dozens of exchange-traded products that offer the potential for some big payouts [see 101 High Yielding ETFs For Every Dividend Investor ]. http://etfdb.com/2013/are-high-yield-corporate-bond-etfs-worth-the-risk/

Junk Bond ETFs: Are 5% Yields Worth the Risk? February 14th at 6:18am by John Spence High-yield corporate bond ETFs have been immensely popular but yields have been pushed so low that newcomers may not be getting adequately compensated for the risk of investing in speculative-grade debt. http://www.etftrends.com/2013/02/junk-bond-etfs-are-5-yields-worth-the-risk/

Market Insight: Are High-Yield Bond ETFs Getting Too Risky? English 한국어 Hello. Today, we are reviewing an insightful piece from ETF Trends that asks a critical question: Have high-yield bond ETFs become too dangerous for investors after their massive rally? The article points out a shifting tide in the junk bond market. After a long period of attracting yield-hungry investors, these high-yield ETFs are starting to lose momentum and are currently slipping toward key technical support levels. A major red flag comes from Moody's, which notes that the safety covenants on these junk bonds have plummeted to all-time lows. This essentially means lenders have fewer protections if a company defaults. To make matters worse, investors are not being rewarded for taking on this extra risk. Because so many people are eager to buy these bonds, the extra yield they offer over safer investments has shrunk dramatically. Looking at the charts, ...

High-Yield Bond ETFs: Rush for the Exits? February 5th at 1:00pm by John Spence The cash outflows in the largest junk bond ETFs such as iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and SPDR Barclays High Yield Bond (NYSEArca: JNK) have analysts wondering whether the pullback is a healthy correction after a strong rally, or a sign of something more serious in credit markets. http://www.etftrends.com/2013/02/high-yield-bond-etfs-rush-for-the-exits/

Europe's High-Yield Bond Markets: Poised For Record-Breaking Issuance In 2010 Sep 16, 2010 | 00:06:02 min In this CreditMatters TV segment, Taron Wade, Standard & Poor's senior research analyst in Corporate Ratings, discusses our outlook for record-breaking issuance in Europe's high-yield bond markets for 2010. Other topics include what to expect in the fourth quarter, sector trends, and credit quality performance in Europe.

Moody's:Aug Global Spec Grade Default Rate 5.0% V 12.3% Yr Ago | iMarketNews.com WASHINGTON (MNI) - Moody's said Wednesday that the default rate for global speculative-grade debt fell to 5.0% in August vs. 12.3% a year ago, while it was 5.1% in the U.S. and down to 4.: The trailing 12-month global speculative-grade default rate fell from 5.5% in July to 5.0% in August, said Moody's Investors Service in its latest default report. A year ago, the global speculative-grade default rate stood at 12.3%. The ratings agency's default rate forecasting model now predicts that the global speculative-grade default rate will fall to 2.7% by the end of this year and then edge lower to 2.0% a year from now. ... iMarketNews.com Moody's:Aug Global Spec Grade Default Rate 5.0% V 12.3% Yr Ago Bloomberg Default Rate Will Fall to 2% Next Year, Moody’s Says

Moody's: European default rate falls to 5.8% - MarketWatch By Sue Chang SAN FRANCISCO (MarketWatch) -- The European speculative-grade default rate fell to 5.8% in the second quarter from 7.3% in the first quarter, Moody's Investors Service said Thursday in a report. The rate was 7.4% at this time last year. Globally, the trailing 12-month global speculative-grade default rate slid to 6.1% from 10% in the previous quarter. Moody's expects the global speculative-grade default rate to fall to 2.4% by the end of this year, and then ease further to 1.8% by the second quarter of 2011, based on its default rate forecasting model. MarketWatch Moody's: European default rate falls to 5.8% Reuters Global junk default rate to fall below 2 pct-Moody's