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Bond Funds Are On Their Own 

December 15, 2015

Tracy Alloway, Bloomberg Business

“Sorry, the trader just stepped away,” is a Wall Street cliché sometimes used to describe the tendency of broker-dealers to conveniently disappear from their desks during times of market stress.

Unfortunately for debt investors, it seems vast swathes of the credit market are on a permanent break thanks to huge changes wrought on the business of trading corporate bonds in the aftermath of the financial crisis.

Those changes were underscored last week when the closure of a Third Avenue credit fund helped spark a wider sell-off in riskier corporate bonds and prompted speculation that the multi-year rally in the asset class could be nearing its end. At issue is the ability of fund managers who have dedicated big portions of their portfolios to such debt to stand on their own once historic inflows reverse. Read more

 
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