Bond Investors Are Getting Really Creative When it Comes to Hedging Their Risk
If you can't hedge credit with credit, try stocks instead.
A blow-up in bonds probably won't look like this
Photographer: Stephanie Green/BloombergThis article is for subscribers only.
What do you get the credit investor who has everything? How about an effective hedge against a major blow-up in bonds?
Hundreds of billions of dollars have poured into corporate bonds helping to boost the size of the overall U.S. market by almost a third over the past six years. At the same time, traders, investors and regulators have all been fretting over the ability to buy and sell the securities without massively impacting their prices. Everyone (and possibly their mothers) seems to be concerned about so-called liquidity in the $7.8 trillion market.