Mutual funds sell off lev loans as market prices in Fed rate cut
Mounting expectations that the US Federal Reserve could slash interest rates in 2019 is a prompting a new wave of redemptions among leveraged loan funds, similar to the selloff in the fourth quarter of last year that pushed CLO warehouses underwater and resulted in significant volatility through year end.
Market sources report that investors in Invesco’s BKLN senior loan ETF, of which at least 80% is made up of the component securities that comprise the S&P/LSTA US Leveraged Loan 100 Index, are redeeming shares and sparking a selloff of a large number of loans as the appeal
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