After a lengthy bull run, junk bond exchange traded funds are beginning to see more headwinds, with the Fed tapering its quantitative easing program and hinting at hiking rates sooner-than-expected, fueling short selling action.

The short interest ratio for the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) rose to 7.746x on February 28, the highest level since September 14, 2007, reports Phalguni Soni for Market Realist.

Meanwhile, the short interest ratio for the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) touched 7.051x on February 28, the highest level since JNK began trading in November 2007.

If the assets show a high short interest ratio of about five or greater, investors typically interpret this as a bearish signal, according to Investopedia. [Junk Bond ETFs May Be Running on Fumes]

The short interest ratio is a viewed as a sentiment indicator that takes the ratio of the short interest to average daily volume of a security. The ratio provides a general representation of the number of days it takes for shorter sellers to repurchase their borrowed shares.

In a short trade, the investor sells securities he or she does not own by borrowing the shares, which will hopefully be bought back at a lower price, allowing the trader to profit off the decline in prices of a security.

The current rise in the short interest ratio of junk bond ETFs reveals that there is increasing investment interest in taking the short side of the speculative grade debt market in anticipation of a rising rate environment.