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Leveragedloans

Credit Stress Panic? No, at least not yet!Credit Stress Panic? No, at least not yet! A friend shared a viral X post claiming we just saw the biggest exodus in the leveraged loan space — and they’re right on the numbers: • $6.5 billion pulled from US leveraged-loan funds in just a week • $1.4 billion from AMEX:BKLN alone — the largest outflow in its 13-year history • $9.6 billion also left high-yield bond funds — the most in nearly two decades But here’s the thing... dollar flows can be misleading without context. What is AMEX:BKLN ? AMEX:BKLN is the Invesco Senior Loan ETF. It tracks floating-rate loans made to riskier corporations — offering higher yields tied to interest rates. These are popular in rising-rate environments… until credit stress kicks in. So what’s the chart saying? Despite the outflows, price just bounced off a key historical support level: $20.31 . This zone has been tested before: • 2018: Fed tightening – sharp but contained • 2020: Covid crash – full panic • 2022: Banking mini-crisis – 💥 and Bitcoin pumped from here 💰🟧… Now in 2025, we’re seeing the biggest dollar outflow… but not the worst price action. Perspective check: The fund is much larger now. $1.4B today ≠ $1.4B in 2018. This move isn’t the apocalypse — not yet. Final Takeaway: If $20.31 holds, this may be just another macro shakeout. Break that, and we enter “panic mode” — but we’re not there yet. (Thank God that Tradingview alerts exist. It's ON) Watchlist: • AMEX:BKLN – key support zone • AMEX:HYG / AMEX:JNK – junk bonds under pressure • NASDAQ:TLT – treasuries getting love • CRYPTOCAP:BTC – does it act as safe haven again? One Love, The FXPROFESSOR 💙
AMEX:BKLN
by FX_Professor
1
Leveraged Loans | Corporate Risk Premium Crisis?Many of you may not be familiar with leveraged loans and the ETFs that have become available to investors through funds over the last few years, but they are important to understand in order to have an edge over the rest of the markets these days - whether that's traditional equities, commodities, derivatives or crypto - as wealth preservation will be a big theme during 2019/2020. Investors have been driven into leveraged loans and related products sharply since the Financial Crisis as a result of record low interest rates in developed markets caused by experimental monetary policy; investors have been desperate for yield! And so we have seen very low risk premium spreads between "risky" junk paper and "risk free" treasury paper as a result of distortions in the marketplace. This spread is currently in the single digits, but during the Financial Crisis - when credit flow started to freeze - the spread skyrocketed into the 40 point range! Treasuries have only room to go lower in the event of a credit crisis and so one can imagine that risky corporate paper will be the victim of such a scenario as companies no longer get access to cheap credit. This will put huge pressure on corporate yields, resulting in defaults and deeply discounted paper. FYI: The Quantity Theory of Credit is my theoretical and empirical inclination. Anyway, keep an eye on leveraged loans and the ETF carrying them. Due to the way these ETFs are held by funds they also carry significant redemption risks, which can cause a run on the funds that issue them and cause funds to panic sell to meet redemption requests from investors. I'm sure there are a few strategies one could devise to take advantage of such a scenario ;)
AMEX:BKLN
by Trader6127