Posted 3/16/2024, 6:15:15 PM
Bond Funds Turn to Derivatives to Boost Returns Amid Tight Credit Spreads
- Bond fund managers are using derivatives to put excess cash to work as credit spreads tighten
- A roll of CDS indexes in March should boost that market as new contracts are issued
- Managers are using indexes like CDX as a liquid way to express bullish views on credit
- Fears of a wall of maturing debt crushing borrowers have fizzled away recently
- Still, some fragility exists with CCC bonds missing the rally and worldwide corporate failures at a high