Corporate Bonds See Wild Swings as Bank Inventories Shrink
- Dealers have trimmed balance sheets considerably in 2022
- Investors say it’s become harder to buy and sell bonds
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Wall Street dealers are increasingly reluctant to trade corporate bonds that they can’t immediately offload, and their hesitation has contributed to sharp moves in prices this year.
Banks’ reticence to buy company debt from investors is showing up in inventory data, which tallies the securities that firms hold on their books rather than sell quickly. Dealer inventories of high-grade corporate bonds averaged just $3.3 billion this year through April 13, according to data from the Federal Reserve Bank of New York. These figures have broadly been falling for years, but 2022 levels are nearly 50% below the 2015-2021 average.