83 days ago • Posted by William Ramstein

Investors bet against corporate debt ETF as spreads shrink on rising rates

Short interest as a percentage of shares outstanding on the $48 billion iShares iBoxx $ Investment Grade Corporate Bond ETF (ticker LQD) jumped to more than 15%, up from 5.9% at the start of the year, according to data from IHS Markit Ltd.. LQD has climbed more than 27% since its late March lows, but has tumbled roughly 3.2% year-to-date. Investors have pulled roughly $6 billion from the ETF so far in 2021, after pouring over nearly $14.9 billion into the fund in 2020, according to data compiled by Bloomberg. The hunt for yield is evidently sending bond buyers down the ratings spectrum as economic data perks up. The average yield on BB debt, the safest of junk bonds, fell to a record low of 2.98% on Tuesday, according to Bloomberg Barclays index data. And across asset classes, the outlook is bright. Source: Bloomberg