Corporate Bonds Content

VIEW AS PDF In recent months, we have seen many high-profile analyses arguing that bond mutual funds amplified stresses in financial markets during the start of the COVID-19 pandemic in March 2020. These analyses conclude that bond mutual funds therefore may require structural...

In the past decade, a number of regulators and academics have discussed concerns about the growth in the assets of bond mutual funds, as well as their increasing share of the bond market, especially the corporate bond market. 1 The concern is that bond fund investors, now playing a...

VIEW AS PDF Why have bond mutual funds grown substantially in the past several years? There are two possible explanations, with very different implications: One view: large inflows to bond funds have been driven by yield-seeking or return-chasing behavior. This explanation is promoted...

Policymakers around the globe are studying the turmoil in March 2020 related to the COVID-19 pandemic to determine what happened and why. Similar work is being done by academics and other analysts. Bond mutual funds have been one area of focus, and policymakers will be considering the...

The spring of 2020 will be remembered for the outbreak of the global COVID-19 pandemic. Within a few short weeks, the world’s leading economies shut down all but the most essential activities—measures that created unprecedented uncertainty in the global capital markets. The result was...

The novel coronavirus disease, or COVID-19, is taking a heavy toll on the world economy—in lives, in the costs of responding, and in lost production and consumption. Worldwide financial markets reflect this. For example, in the United States, the Dow Jones Industrial Average hit its...

In the past year, regulators have expressed concerns that regulated funds with a mandate to invest in investment grade corporate bonds might pose risks to financial stability. Most recently the focus has been on funds’ holdings of BBB-rated corporate bonds, the lowest category still...

In the last few months, we’ve seen concerns expressed in the media, as well as by some central banks (including the US Federal Reserve, the Bank of England, and the Bank of Canada) that corporate bond funds might raise financial stability concerns. When central banks raise short-term...