Bond Funds See Largest Outflows Since June 2013 Led by Junk Debt

Bond funds suffered the largest weekly withdrawals in more than two years, Bank of America Corp. said.

There was $13.1 billion of outflows worldwide in the week ended Dec. 16, the most since June 2013, the bank said in a note citing data compiled by EPFR Global. That included $5.3 billion from speculative-grade bond funds and $1.8 billion from bank-loan funds, both of which were the largest weekly withdrawals in a year.

Third Avenue Management and Stone Lion Partners have frozen redemptions from high-yield funds, and Lucidus Capital Partners has liquidated its entire portfolio, because of investors pulling out of riskier assets. Globally, junk-rated company bonds are on track for the first annual loss since 2008 amid a slump in commodity prices.

The average yield on corporate junk bonds worldwide reached 8.7 percent on Monday, the highest in almost four years, based on Bank of America Merrill Lynch index data. The notes have lost 2.2 percent this year, after returning 2.5 percent in 2014, the data show.

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