BlackRock Leads ETF Boom to Global Junk Rally: Credit Markets

The $28.4 billion Blackrock Inc (BLK).-led industry of exchange-traded funds that buy U.S. junk bonds is expanding into global speculative-grade debt as the notes outperform dollar-denominated securities by the most since 2009, Bloomberg reports.

BlackRock, the world’s biggest money manager, opened the first ETFs on April 3 that will invest in junk bonds from Europe to Asia after its iShares iBoxx High Yield Corporate Bond Fund in the U.S. grew to more than $14 billion in less than five years. Van Eck Global, the investment firm founded in 1955, opened its International High Yield Bond ETF the same day.

Fund managers are broadening their investments beyond U.S. debt with yields on junk bonds outside the country almost double the average of the past 10 years. Investors poured a record $31.1 billion into speculative-grade debt in the 14 weeks ended April 2, according to EPFR Global data, and a three-month rally in dollar-denominated junk securities is now losing steam.

“There are many fixed-income managers today who are really reaching out to international and global issuers,” Darek Wojnar, head of product development and management for BlackRock’s iShares, said in a telephone interview. “That’s one of the ways to diversify sources of yield.”

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