Tuesday, June 6, 2023
Correct Success
  • Credit
    • How to get out of debt
    • Credit Cards
    • How to repair credit
  • Finance
    • Financial success
    • Financial management
    • Financial health
  • Insurance
  • Loans
    • Business loans
    • Mortgage Loan
    • Home Loan
    • Personal Loan
    • Student Loan
  • Money
    • Taxes
    • Investment
  • Videos
No Result
View All Result
Correct Success
  • Credit
    • How to get out of debt
    • Credit Cards
    • How to repair credit
  • Finance
    • Financial success
    • Financial management
    • Financial health
  • Insurance
  • Loans
    • Business loans
    • Mortgage Loan
    • Home Loan
    • Personal Loan
    • Student Loan
  • Money
    • Taxes
    • Investment
  • Videos
No Result
View All Result
Correct Success
No Result
View All Result
ADVERTISEMENT

Investment Grade Corporate Debt Funds Continue To Bleed As Credit Spreads Increase

10 months ago
in Credit
Reading Time: 4 mins read
Jack Fischer profile picture
ShareShareShareShare

lucadp

Corporate investment-grade debt funds (including both conventional mutual funds and ETFs) have suffered $113.8 billion in year-to-date outflows. This figure would already break the annual outflow record by nearly $100 billion. Investment grade (IG) corporate debt funds broke their all-time calendar year records during their 2020 and 2021 campaign (+$266.7 billion and +$274.4 billion, respectively). If the tides do not turn quickly, IG funds will only log their second calendar year outflow.

While recent performance may be trending upward, year-to-date performance has been dismal. Lipper Corporate Debt A-Rated Funds have realized a negative 11.06%, while Lipper Short Investment Grade Debt Funds and Lipper Short-Intermediate Investment Grade Debt Funds returned negative 3.54% and negative 4.50%, respectively.

Corporate investment grade funds weekly flows

Refinitiv Lipper

Starting after the peak pandemic, the IG Option-Adjusted Spread (OAS) tumbled to right around 100 basis points (bps). Falling spreads, easy monetary policy, and an insatiable consumer demand attracted market participants to investment grade corporate debt funds. While balance sheets looked strong in the short term, inflation and geopolitical crisis hit worldwide economies hard. To combat inflation and regain pricing control, the Federal Reserve ended its quantitative easing program while increasing interest rates at a historic pace. For the second straight month, the Fed raised the fed funds rate by at least three-quarters of a percent—it raised rates 100 bps last month for the first time since 1994.

As the monetary tightening continues, companies’ balance sheets become increasingly stressed. Just this Tuesday, Walmart (WMT) shook up the markets as shares fell by nearly 8% on an early profit warning citing inflation and supply chain challenges—also an indication that retail consumers are cutting back on spending.

Credit spreads (a.k.a. Treasury spreads) such as the ICE OAS are the difference between an index of corporate bonds and a U.S. Treasury issue with similar credit ratings and maturity dates. Credit spreads act as the additional incentive (yield) for an investor which compensates them if they choose to take on the added risk of a corporate bond rather than a “risk-free” Treasury bond. With corporate balance sheets being more strained, credit spreads have been increasing since the start of the year after remaining essentially flat during 2021. Credit spread increases, among other factors such as demand for Treasuries, have helped cause poor IG bond fund performance so far this year.

US corporate index option-adjusted spread

St. Louis FRED

This past fund-flows week, corporate-investment grade debt funds suffered $2.4 billion in outflows—conventional mutual funds accounted for $4.2 billion of those outflows. Corporate IG debt funds have posted 18 straight weeks of outflows, producing their second and third largest monthly outflows on record in May (-$39.1 billion) and June (-$34.6 billion). Their second quarter was the second largest quarterly outflow (-$84.1 billion), only trailing Q1 2020 (-$101.8 billion). Corporate IG debt fund’s trailing four-week outflow moving average has remained above $1.3 billion for 24 straight weeks.

This week the U.S. gross domestic product (GDP) was published at a 0.9% annualized rate during Q2 2022, which after shrinking 1.6% in Q1, translates for many market participants as an official recession. The International Monetary Fund (IMF) also lowered its global economic growth forecast this week—IMF now forecasts a 3.2% (vs. 3.6%) expansion in 2022 and a 2.9% (vs. 3.6%) expansion in 2023. If growth continues to slow with stable upward pricing pressures, we may continue to see credit spreads increase, meaning more trouble for the investment grade corporate debt bond market.

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

— to seekingalpha.com

ShareTweetPin2Send

please Subscribe for further updates

Unsubscribe
Previous Post

Prospera Financial Services Inc Invests $123,000 in Illumina, Inc. (NASDAQ:ILMN)

Next Post

Hwang Creates Resource For Insurance Rate Hike Opponents

Related Posts

What it means for your electric vehicle purchase – NBC 6 South Florida

What it means for your electric vehicle purchase – NBC 6 South Florida

by Tim Hartwell
0
3

With the growing demand for electric vehicles (EVs), consumers are increasingly interested in the tax credits available to make these...

twitter

Lawmakers pass bill to create oyster shell recycling tax credit

by Tim Hartwell
0
2

Photo courtesy CRCL. The Louisiana Legislature has passed legislation that would incentivize restaurants to recycle what would normally be discarded...

Oahu homeowners might get $350 tax credit

Oahu homeowners might get $350 tax credit

by Tim Hartwell
0
2

The Honolulu City Council’s pending approval Wednesday of Mayor Rick Blangiardi’s proposed $3.41 billion operating budget for next fiscal year...

Image default

Naftali Credit Partners Closes on Construction Loan for 64 University Place

by Tim Hartwell
0
2

Naftali Credit Partners, a subsidiary of Naftali Group – the leading and privately held, global real estate development and investment...

Six Credit Unions Expand Branch Footprints

Six Credit Unions Expand Branch Footprints

by Tim Hartwell
0
2

By Jim DuPlessis June 05, 2023 at 04:29 PM New branches are popping up from Minnesota to Florida. Rendering of...

Credit Crunch Will Spark 'Rolling Blackout' of Corporate Defaults: BofA

Credit Crunch Will Spark ‘Rolling Blackout’ of Corporate Defaults: BofA

by Tim Hartwell
0
4

Don Emmert /AFP/GettyImages The credit crunch will result in a wave of defaults hitting different sectors of the economy, BofA...

Next Post
Hwang Creates Resource For Insurance Rate Hike Opponents

Hwang Creates Resource For Insurance Rate Hike Opponents

Patch News

🌱 Credit Card Skimmers + Cards For Eli Gold

The Companies That Take Money Straight From Your Paycheck

The Companies That Take Money Straight From Your Paycheck

GG Engineering Rights Issue 2022 Date, Price, Form, Allotment & Ratio

GG Engineering Rights Issue 2022 Date, Price, Form, Allotment & Ratio

SBA Disaster Loans available in White County | Business

SBA Disaster Loans available in White County | Business

2
Texas Gov. Abbott to continue special sessions until a property tax solution is reached – NBC 5 Dallas-Fort Worth

Texas Gov. Abbott to continue special sessions until a property tax solution is reached – NBC 5 Dallas-Fort Worth

2
Petrucci's Ice Cream to raise money for local food pantry

Petrucci’s Ice Cream to raise money for local food pantry

1
Watch Mark Get Zucked to the Mat in Recent Jiu-Jitsu Match

Watch Mark Get Zucked to the Mat in Recent Jiu-Jitsu Match

2
What it means for your electric vehicle purchase – NBC 6 South Florida

What it means for your electric vehicle purchase – NBC 6 South Florida

3
NBFC unsecured personal loan sanctions fall 15%

NBFC unsecured personal loan sanctions fall 15%

2

Tags

business businessloan business loans cards correct correct Insurance correct success correctsuccess correct_news credit Credit Cards credit score debit debit cards DEBT Facebook facebook new name FB Finance financial Financial health Financial manageme Financial management Financial success How to get out of debit How to repair credit Insurance Investing investment IPO loan Loans Market meta meta facebook meta platforms money news Personal Personal Finance personalloan success tax Taxes US

Categories

  • Ameya Engineers IPO
  • Annapurna Swadisht IPO
  • Asia
  • asia
  • Billionaires
  • Business
  • business
  • Credit
  • Credit Cards
  • Dipna Pharmachem IPO
  • Dreamfolks Services IPO
  • Finance
  • Financial health
  • Financial management
  • Financial success
  • Forbes Asia
  • How to get out of debt
  • How to repair credit
  • Infurnia Holdings IPO
  • Insurance
  • Investment
  • IPO Allotment Status
  • IPO Listing
  • IPO Subscription Status
  • ipo updates
  • Ishan International IPO
  • JFL Life Sciences IPO
  • Kore Mobile IPO
  • Loans
    • Business loans
    • Home Loan
    • Mortgage Loan
    • Personal Loan
    • Student Loan
  • Mega Flex Plastics IPO
  • money
  • Money
  • Sabar Flex India IPO
  • Shantidoot Infra Services IPO
  • SME IPO
  • Tamilnad Mercantile Bank IPO
  • Taxes
  • technology
    • social-media
  • Videos
  • Viviana Power Tech IPO
  • worlds-billionaires
SBA Disaster Loans available in White County | Business

SBA Disaster Loans available in White County | Business

2
Texas Gov. Abbott to continue special sessions until a property tax solution is reached – NBC 5 Dallas-Fort Worth

Texas Gov. Abbott to continue special sessions until a property tax solution is reached – NBC 5 Dallas-Fort Worth

2
Petrucci's Ice Cream to raise money for local food pantry

Petrucci’s Ice Cream to raise money for local food pantry

1
Watch Mark Get Zucked to the Mat in Recent Jiu-Jitsu Match

Watch Mark Get Zucked to the Mat in Recent Jiu-Jitsu Match

2
What it means for your electric vehicle purchase – NBC 6 South Florida

What it means for your electric vehicle purchase – NBC 6 South Florida

3
NBFC unsecured personal loan sanctions fall 15%

NBFC unsecured personal loan sanctions fall 15%

2
Correct-Success-Logo

Correct Success | Finance, Debt, Loan, Credit etc

Categories

  • Ameya Engineers IPO
  • Annapurna Swadisht IPO
  • asia
  • Asia
  • Billionaires
  • Business
  • business
  • Business loans
  • Credit
  • Credit Cards
  • Dipna Pharmachem IPO
  • Dreamfolks Services IPO
  • Finance
  • Financial health
  • Financial management
  • Financial success
  • Forbes Asia
  • Home Loan
  • How to get out of debt
  • How to repair credit
  • Infurnia Holdings IPO
  • Insurance
  • Investment
  • IPO Allotment Status
  • IPO Listing
  • IPO Subscription Status
  • ipo updates
  • Ishan International IPO
  • JFL Life Sciences IPO
  • Kore Mobile IPO
  • Loans
  • Mega Flex Plastics IPO
  • money
  • Money
  • Mortgage Loan
  • Personal Loan
  • Sabar Flex India IPO
  • Shantidoot Infra Services IPO
  • SME IPO
  • social-media
  • Student Loan
  • Tamilnad Mercantile Bank IPO
  • Taxes
  • technology
  • Videos
  • Viviana Power Tech IPO
  • worlds-billionaires

Recent Post

  • SBA Disaster Loans available in White County | Business
  • Texas Gov. Abbott to continue special sessions until a property tax solution is reached – NBC 5 Dallas-Fort Worth
  • Petrucci’s Ice Cream to raise money for local food pantry

Navigation

  • Home
  • About Us
  • Contact Us
  • Privacy & Policy
  • Home
  • About Us
  • Contact Us
  • Privacy & Policy

© 2020 Correct Success. Design By Techdesire

No Result
View All Result
  • Credit
    • How to get out of debt
    • Credit Cards
    • How to repair credit
  • Finance
    • Financial success
    • Financial management
    • Financial health
  • Insurance
  • Loans
    • Business loans
    • Mortgage Loan
    • Home Loan
    • Personal Loan
    • Student Loan
  • Money
    • Taxes
    • Investment
  • Videos

© 2020 Correct Success. Design By Techdesire

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Go to mobile version