Bloomberg News

Junk-Bond Fund Withdrawals Reach Highest Since August

May 25, 2012

Investors pulled $3.05 billion from junk-bond funds globally in the week ended May 23, the most since August, as a worsening political crisis in Greece roiled credit markets.

U.S. funds recorded the most outflows, with $1.97 billion pulled from funds that buy speculative-grade debt, according to Cambridge, Massachusetts-based EPFR Global. That included $856 million of redemptions from exchange-traded funds that hold the securities.

High-yield bond funds reported $1.26 billion of redemptions on May 21, the biggest daily withdrawal this year, amid mounting concern that a Greek exit from Europe’s shared currency would disrupt the financial system.

Speculative-grade debt, rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s, has lost 1.6 percent this month, the biggest monthly decline since November, according to Bank of America Merrill Lynch’s Global High Yield Index.

To contact the reporter on this story: Lisa Abramowicz in New York at labramowicz@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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