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Short Interest in Biggest Credit ETF Jumps to Covid-Panic Level

  • Tight spreads, rising duration risks cool appetite for LQD
  • Investors have pulled $6 billion from fund so far this year

Investors are building bets against the largest corporate debt exchange-traded fund as spreads shrink and interest rates rise.

Short interest as a percentage of shares outstanding on the $48 billion iShares iBoxx $ Investment Grade Corporate Bond ETF (ticker LQD) jumped to more than 15%, up from 5.9% at the start of the year, according to data from IHS Markit Ltd. That’s the highest level since last March, when high-quality bonds sold off as investors raced to raise cash in the face of a quickly spreading pandemic.