Skip to content
Subscriber Only

Investors Dump Hedges on Junk Bonds Even as Europe Defaults Loom

  • Positioning in Markit CDS index is the most bullish in a year
  • Market swells under pandemic-induced borrowings, downgrades
relates to Investors Dump Hedges on Junk Bonds Even as Europe Defaults Loom
Updated on

Investors are sitting astride the largest junk bond market in Europe’s history without a rainy-day fund. Even credit bulls worry that may not be such a good idea.

Hedges on the Markit iTraxx Crossover index were effectively neutralized after investors jettisoned $1.8 billion of credit-default insurance in the week ending June 11, according to analysis by Barclays Plc. That makes positioning the most bullish -- and exposed to risks -- as it’s been in a year.