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Second Warning: Get Out of Your Bond Fund Before It’s Gated
by David Kranzler
Investment Research Dynamics
The junk bond bubble has exploded. Yesterday a public mutual fund “specializing” in the lowest-rated segment of junk bond market announced that it was suspending redemptions and liquidating its assets. It’s debatable whether or not it will be able to sell the nuclear garbage in the fund unless the Fed prints up some money and buys it.
Today Stone Lion Capital Partners gated one of its hedge funds “specializing” in distressed debt (defaulted and near-default bonds and bank debt). Interestingly, Stone Lion was founded by two former Bear Stearns employees after Bear Stearns choked to death on fraudulent mortgage paper. Stone Lion disclosed that it had received redemption requests that were significantly in excess of its ability to sell enough holdings in the fund to meet the requests.
Continue Reading at InvestmentResearchDynamics.com…
Source: http://financialsurvivalnetwork.com/2015/12/second-warning-get-out-of-your-bond-fund-before-its-gated/?utm_source=rss&utm_medium=rss&utm_campaign=second-warning-get-out-of-your-bond-fund-before-its-gated
