The recent distress in corporate bond markets: cues from ETFs

Key takeaways

• Amid widespread sell-offs in risky asset classes, corporate bond exchange-traded funds (ETFs) traded at steep discounts to underlying asset values in March.
• Contributing factors were high market volatility, reduced risk-taking by dealers and investors' reaction to policy decisions.
• Policy interventions that improve market functioning in a given sector can have temporary yet important spillovers to other segments through portfolio rebalancing by investors.

The views expressed in this publication are those of the authors and not necessarily those of the BIS.