Junk Investors Seen Pulling Cash, Setting Exit Record

(Bloomberg) -- U.S. junk bond funds are set to record their third consecutive week with outflows of more than $4 billion as investors retreat from risk assets amid the continuing spread of the coronavirus and the absence of a policy response from the Trump administration to combat the resulting economic fallout.

U.S. high-yield funds have seen outflows of $4.8 billion from Thursday through to Tuesday based on Refinitiv Lipper data estimates, according to JPMorgan Chase & Co analysts. A final figure is due Thursday. If that occurs it will be the first time on record that funds have seen three straight weeks of outflows topping $4 billion, according to data compiled by Bloomberg. Investors withdrew more than $5 billion for the week ended March 4, after pulling $4.2 billion for the week ended Feb. 26, according to Refinitiv Lipper.

The benchmark junk bond index posted a 3.12% loss on Monday, its biggest one-day decline since 2008, fueled by a fall of more than 12% in the energy index, the biggest one-day drop on record. Yields surged the most in 11 years and spreads widened to their highest since April 11, 2016.

Investors have been exiting across leveraged assets. Loan funds are on track to see about $1.75 billion of exits this week, JPMorgan analysts wrote in a note, citing Refinitiv Lipper. Investors withdrew $2.29 billion from leveraged loan funds for the week ending March 4, the most since January 2019, according data compiled by Bloomberg.

To contact the reporter on this story: Gowri Gurumurthy in New York at gurug@bloomberg.net

To contact the editors responsible for this story: Natalie Harrison at nharrison73@bloomberg.net, Adam Cataldo, Dawn McCarty

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