The massive exodus from junk-bond ETFs amid the coronavirus outbreak has spread to the top-rated debt market.

Investors pulled a record US$2.02 billion from BlackRock Inc.’s iShares iBoxx US$ Investment Grade Corporate Bond ETF, ticker LQD, in five days through Friday, according to data compiled by Bloomberg. The withdrawals from the US$33 billion exchange-traded fund came ahead of what could become a second straight week of zero new sales from high-grade issuers, with companies reluctant to issue debt amid the rapid spread of the coronavirus.

Largest Investment Grade Bond ETF Sees Biggest Fund Outflow Ever

While global stock markets rebounded on Monday, the cost to protect against default on North American corporate debt rose to the highest in 14 months. The erivatives index, known as the high-grade CDX, rose for an eighth straight day as the OECD warned the virus is pushing the global economy closer to contraction.

“If you’re looking at your portfolio, you can either sell high yield -- which is down significantly -- or you can sell LQD, which hasn’t moved as much,” said Peter Tchir, Academy Securities’s head of macro strategy. “If you missed it, maybe you keep some of the stuff that’s sold off in hopes that it rebounds.”

BlackRock said Monday that it is cutting its credit exposure to neutral due to uncertainty about the economic outlook. The asset manager cited rich valuations in turning underweight global investment-grade credit.

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U.S. junk bonds posted their worst week since 2011 as equities shuddered. Additionally, investors are increasingly betting against LQD as sentiment sours. Short-interest on the fund has surged to a record 10.3 per cent of shares outstanding, according to data from Markit.

Compounding concerns is a freeze in investment-grade issuance, according to Tchir. Last week marked the market’s first zero issuance week aside from holidays and seasonal considerations since July 2018.

“I think someone has to test that and see how much demand there is,” Tchir said. “If we could see a new IG corporate get done and trade well, I think that would take pressure off the entire market.”