scorecardresearchUS Investment-Grade Bond Funds Snap Record 18 Weeks of Outflows

US Investment-Grade Bond Funds Snap Record 18 Weeks of Outflows

Updated: 05 Aug 2022, 08:19 AM IST
TL;DR.

US corporate investment-grade bond funds saw cash inflows for the first time since March following gains in the debt that’s helped trigger an issuance spree.

Signage is seen at Nasdaq OMX Copenhagen in Copenhagen, Denmark, July 30, 2022. REUTERS/Andrew Kelly

Signage is seen at Nasdaq OMX Copenhagen in Copenhagen, Denmark, July 30, 2022. REUTERS/Andrew Kelly

(Bloomberg) -- US corporate investment-grade bond funds saw cash inflows for the first time since March following gains in the debt that’s helped trigger an issuance spree.

Investors added $1.22 billion for the period ended Aug. 3, according to Refinitiv Lipper data, ending a record streak of 18 weeks of withdrawals amounting to $74 billion. US high-yield bonds are also back in demand, with mutual funds and exchange-traded funds seeing inflows of $2.93 billion over the same period, the second straight week of inflows, as fears over an imminent recession abate.

Borrowers are seizing the rally. The junk-bond market saw two companies come forward Thursday, the first deals to be launched in more than a week, while social-media giant Meta Platforms Inc. led another busy day in the investment-grade primary where issuance has already blown through estimates for the week. 

Average yields for investment-grade bonds have been falling for more than a month, reaching 4.38% on Wednesday as early signs of economic slowdown have spurred investors to dial back their expectations for Federal Reserve rate hikes. Junk bonds gained 5.9% in July, their biggest one-month rally in a decade, and have also been rising in August, according to Bloomberg index data. 

US leveraged loan funds, however, registered outflows for the eighth straight week as $344 million left following an $833 million exit in the prior period. 

First Published: 05 Aug 2022, 08:19 AM IST