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One the many marvels of 2020 was the US corporate bond market, where borrowers were able to access cheap money in record amounts despite (or because of, depending on how you want to conceptualize things) the worst economic downturn in a century.
When the lockdowns began in March, credit markets convulsed. Spreads ballooned wider, CDX exhibited multi-standard deviation moves, outflows accelerated, and popular ETFs looked to be on the brink of “breaking,” as big discounts to NAV suggested the underlying liquidity mismatch in retail credit products was finally being exposed as an untenable flaw (figure below).
Ultimately, the Fed stepped in on March 23, and then, just days later, unveiled a backstop for fallen angels and high yield ETFs.
About Post Author
Mirza Ashraf Beg @ Dubai
Author is a Fin-tech entrepreneur having excellent track record of over 20 years of banking and financial industry in U.A.E, Saudi Arabia and India. Wide-range of experience in Corporate & Wholesale Banking, Treasury, Investment Banking, Funds, Corporate, Commercial, Credit, Cash, Trade Finance, & Islamic Operations. Outclass expertise in Products & Regulatory Controls, Risk Management, in “Business Modeling” focused on bespoke client products along with technology adoption. Proven in-depth understanding of micro/macro financial market econometrics, Offshore, Cross Border Banking and Legal Barriers. Major Strengths: • Debt & Asset Management • Treasury, Investment & Funds • Credit Management & Product Development • Structured products and Restructuring • Hedging and Derivative Markets • FinTech & Reg Tech Advisory Expert in Regional/Global Regulatory operational management having exemplary accolades in Islamic Banking with high end achievements in structured products. Expertise in Global Intelligence, Value Research, Product Development & Processing, projects related to current global disruptive technological changes & its adaptation through FinTech Landscape – micro/macro. Author is a Fintech Writer, Market Researcher, Speaker & Panelist in various International Banking & Technology Forums: Terrapin, Clear stream/Euroclear, Fleming, BII, Allan Lloyds, Trescon, Alpha-one, PWC, Finastra Universe - Misys-Connect etc.