This news note features a recent article in the Financial Times. The article says that the Bank for International Settlements (BIS) has issued a warning regarding the increase in B rated corporate bonds.
The article notes that the BIS says that under the wrong conditions, mutual funds and other market participants could be forced to "offload large amounts of bonds quickly". The article references the most recent BIS quarterly report.
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"Ratings based investement mandates can lead to firesales" warned economists Sirio Aramonte and Egemen Eren in the BIS latest quarterly review." (see pages 12-13) . . .
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