Someone Just Traded $600 Million of High Yield Funds: ETF Watch

(Bloomberg) -- It looks like an investor has just traded a massive amount of high yield exchange-traded funds as three block trades worth more than $609 million hit the tape around 12:30 p.m. in New York.

The $9.1 billion SPDR Bloomberg Barclays high Yield Bond ETF, known by its ticker JNK, absorbed two block trades of about 9.7 million shares worth over $350 million, according to Bloomberg data. The $15.3 billion iShares iBoxx $ High Yield Corporate Bond ETF, or HYG, saw a trade of about 3 million shares worth $257 million, the data show.

Someone Just Traded $600 Million of High Yield Funds: ETF Watch

The trades were likely triggered right as the 10-year yield broke out above its 50-day moving average of 2.83 percent, noted Dave Lutz, head of ETFs at JonesTrading Institutional Services.

These are some of the largest blocks to go up since the panic and capitulation of February 9, according to Josh Lukeman, head of ETF market making for the Americas at Credit Suisse Group AG.

"The allocation back into high yield is a vote of confidence for risk-on bets," Lukeman said.

Assets in high-yield debt ETFs have multiplied by more than 10 times since 2008 as investors chased riskier debt in the low-rate environment that followed the financial crisis, according to research from Bloomberg Intelligence. That makes the category vulnerable to rising rates as category assets stalled or shrank the last two times rates rose for a significant period.

"While junk bond ETFs still make up a small fraction of the junk bond assets, they are becoming a bigger part of the trading volume as their oceanic liquidity attracts the biggest institutional investors," said Bloomberg Intelligence’s Eric Balchunas.

©2018 Bloomberg L.P.