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Open a Junk-Bond ETF’s Kimono to See a Lot of Expensive Shorts

Hedge funds dislike junk bonds so much that they’re willing to pay 48 times more to short the debt using exchange-traded funds than at the end of last year.

A prime example is BlackRock Inc.’s $12.4 billion fund that trades under the ticker HYG, which allows traders to borrow a certain proportion of shares to wager that prices will decline. The daily cost for financing such activity was $342,000 a day in the week ended Aug. 5, up from $7,000 at the end of December, according to DataLend, which tracks securities lending.