The perennial question for sellers.
From the movie Oliver:
Who will buy?
via Genius.com...KNIFEGRINDER
Who will buy?
STRAWBERRY-SELLER
Who will buy?
MILKMAID
Who will buy?
ROSE-SELLER
Who will buy?ALL
Who will buy?
From FT Alphaville:
Most bonds don't trade
A fresh piece of Citi research lands on bond market liquidity, which evokes a reminder of those days in late 2015 when a lot of attention was focused on how easy it was to buy and (more importantly) sell corporate debt.
Back then JNK and HYG, the two biggest high-yield bond exchange traded funds, had fallen to their lowest since 2009 after Third Avenue, a US asset manager, said it would shut down its $788m “Focused Credit Fund” after a wave of losses and investor redemptions....MUCH MORE
As most corporate debt doesn't trade very regularly, the lack of volume could be a problem should a lot of investors want to withdraw money from mutual funds. The funds would have to sell bonds to raise cash for redemptions, which could crash prices and spark more withdrawals, a process similar to the bank runs of the financial crisis.
The problem failed to materialise, everything recovered and the long boom carried on, however. But did liquidity improve?
Not so much, says Anindya Basu of Citi (with our emphasis):
we find that on average, only 18% of the entire corporate bond universe (by CUSIP) traded on any given day. For issues that traded 5 times or more on a given day, the percentage was in the single digits at about 8% [see chart below]. Furthermore, most of these CUSIPs trade in small size – more than 75% of the total volume traded during this period can be attributed to only 15% of the CUSIPs....
