Tag Archives: phb

Are Junk Bond ETFs Sending Signals? (HYG, JNK, SJNK)

By The ETF Professor
Benzinga Staff Writer

The proliferation of new junk bond ETFs in 2012 has been nothing short of impressive and two industry stalwarts, BlackRock’s (NYSE: BLK) iShares and Van Eck Global’s Market Vectors unit, have been leading the charge.

But it is some of the more seasoned high-yield bonds that are catching traders’ eyes on Thursday. Following an usual $725 million redemption last week in the $11.1 billion SPDR Barclays Capital High Yield Bond ETF (NYSE: JNK), activity is picking up across the board in highly liquid, large asset junk bond ETFs.

While the redemption in JNK last week wasn’t a true redemption because the seller allegedly took delivery of the actual bonds, unusual activity is permeating the high-yield bond ETF space today. JNK has already double its average daily volume.

“The selling we have seen today is not for receipt of bonds. This looks to be an exit trade from this asset class,” ETF market maker WallachBeth Capital said in a note.

“Considering that Germany may throw in the towel on austerity, the U.S. could enter round 3 of quantitative easing, the banks are under increased regulatory pressure and still the lingering Greek issues, it isn’t surprising that some might see higher rates on the horizon,” Chris Hempstead, head of ETF execution services at WallachBeth, said in an interview with Benzinga. “That would not bode well for these funds.” Continue reading

High Yield Junk Bond ETFs-Eye On Distortions

It appears that our comments re:  junk bond ETFs over the past 6 weeks has inspired main stream media, and in particular, WSJ’s Jason Zweig, to zero in on a talking point raised here last month: the logistics by which certain ETFs are ‘created’ and redeemed, and the potential distortion in prices between the underlying junk held by high yield bond ETFs, and comparable  junk issues that are not components to the most popular high yield bond ETFs. Continue reading