To enter the virtual seminar room, please use the following login credentials:
Zoom URL: https://uni-frankfurt.zoom.us/j/97545608513?pwd=WVQ4Ym5MOHFhK05HaEVZcVdBN01WQT09
Meeting ID: 975 4560 8513
We show that mutual funds with a large share of a bond issue sell their holdings of that issue to a lower extent when they experience redemptions, arguably because they attempt to avoid a drop in the bond price and the consequent negative feedback effects on the unsold part of their position. As a consequence, bond issues with more concentrated ownership experience higher returns during periods of turmoil and have lower price volatility. We provide evidence that the stabilizing trading of bond funds with a large share of an outstanding issue can help explain how the intervention of the Fed in the corporate bond market through the Secondary Market Corporate Credit Facility quickly stabilized both eligible and ineligible bonds.