Some Debt Investors Struggle With Illiquid Bond Markets

Illiquid bond markets have been derided by certain market participants for some time now, with an increase volatility and “flash events” being a particular concern.  Now this lack liquidity could lead to the “worst quarter in history” for bond funds, according to one market participant.

Liquidity is thin in debt markets, notes Loomis Sayles executive Dan Fuss

While debt-based hedge funds had bet on bond prices falling and were confronted by investors increasing exposure to junk debt funds in February, it is the lack of liquidity in markets that is a problem for fund profitability.

“The market is going, I think, to stay thin” Dan Fuss, vice...