At a time when fears are high about market liquidity comes a significant shift in the primary players in the corporate bond market.
Households, hedge funds and nonprofit groups, a bunch historically considered to be long-term holders of fixed-income instruments, ditched corporate debt in the second quarter, selling $122 billion after reducing their holdings by just $24 billion over the previous three months, according to data from the Federal Reserve and Bank of America Merrill Lynch.
Conversely, purchases by foreigners more than doubled, from $80 billion to $172.2 billion. Foreigners now own more than a quarter of the $8.1 trillion corporate bond market, with a 25.9 percent stake that is just shy of the 26.5 percent portion owned by mutual and exchange-traded funds.
Households, a category that for statistical purposes also includes hedge funds, now own just 4 percent of the group.