“LOL”. And also, “WTF?”
I guess this is what happens when a central bank moves to corner the market on corporates just as swap spreads balloon wider on a flight to safety bid triggered by mounting political risk.
And now for something even more ‘bizarre’…
Yet, in the credit market, the last few weeks have thrown up a new and perhaps even more bizarre phenomenon: a surge in the number of bonds with negative spreads (yes, not just negative yields but now negative spreads!) Chart 3 shows the volume of Eurodenominated investment-grade bonds with negative z-spreads. Numbers have moved around a lot in the last week (so here we show a 5 day average), but there are currently just over €150bn of negative z-spread bonds.