The recent distress in corporate bond markets: cues from ETFs

BIS Bulletin  |  No 6  | 
14 April 2020
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 |  9 pages

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.