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The Fed and BlackRock’s Bond-Buying Criteria Challenged – The Desk

Full Article: The Desk

Three main questions around execution have been raised by market participants to The DESK: Who will manage the broker list? How will execution quality be judged? How will conflicts of interest be avoided by BlackRock’s Financial Markets Advisory team, when it might buy assets including BlackRock ETFs, or assets it has a view on for investment purposes?

The Fed’s Intervention is Widening the Gap Between Market Haves and Have-Nots – Wall St Journal

Full Article: Wall Street Journal

The handful of markets in which the Fed has directly intervened by purchasing assets or lending against them have recouped some of their losses since then, a reassuring sign for investors who were taken aback by the indiscriminate selling that occurred throughout much of March.

But in riskier markets that fall outside of the Fed’s purview—including junk bonds, leveraged loans and nongovernment-backed mortgage bonds—the pain has been slower to abate. Some markets remain essentially closed for business, setting off a race against the clock for borrowers to stay afloat.

Open Trading Liquidity Provision in Stressed Markets – MarketAxess

Full Article: MarketAxess

Disclosed dealers provide the vast majority of liquidity in global corporate bond markets. Under difficult market conditions, though, a Request-for-Quote (RFQ) might receive few or perhaps no responses from disclosed dealers. There are any number of reasons for this including risk limits, shift to manual trading and/or potentially reduced efficiency as employees and traders are working remotely.

S&P, Moody’s Cut Credit Grades at Fastest Pace in a Decade – Yahoo! Finance (Bloomberg)

Full Article: Yahoo! Finance

Downgrades are outpacing upgrades at the two biggest credit-rating firms by more than 3 to 1 to start the year, the most on a quarterly basis since the depths of the financial crisis, according to data compiled by Bloomberg. At the same time, risk premiums on investment-grade bonds have surged, while junk yields breached 10% for the first time in more than eight years.

Fed Could Buy $4.5 trillion of Debt if it Starts Snapping up Corporate Bonds – MarketWatch 

Full Article: MarketWatch

Following the example of the European Central Bank, the Fed could add corporate bonds to the list of assets it is buying to restore normalcy to a bruised corner of financial markets that has seen a freeze-up in liquidity amid worries that even large corporations may default on their obligations, according to Hans Mikkelsen, head of U.S. investment-grade strategy at Bank of America Global Research, in a Tuesday note.

Corporate Bond Volume Doesn’t Mean Corporate Bond Liquidity – BondCliQ Institutional Market Monitor

Full Article: BondCliQ

A bird’s eye view of transaction data in the US corporate bond market indicates an increase in trading activity since the start of the COVID-19 market panic in the US (2/24/20). The ADV of the 35 trading days before 2/24 (pre-COVID-19) was $35bn. Post COVID-19 (2/24 to 3/11), corporate bond market ADV is ~$55bn, a 53% in daily transaction volume.

Given these numbers, it would be natural to assume that liquidity is abundant, however, a closer look at detailed transaction data tells a different story.