Additionally, SNLN shows a 0.16% discount to its NAV, SRLN has a 0.01% discount and FTSL has a 0.12% premium. The pricing action suggests that investors are willing to take a slight loss to exit BKLN.
“There’s been more sell pressure rather than buy pressure,” Hoffman added. “There’s a conversion price” to turning the loans underpinning the shares into cash.
The ETFs track senior floating-rate bank loans. Due to their floating rate component, bank loans are seen as an attractive alternative to traditional high-yield corporate bonds in a rising rate environment. Bank loan securities allow their interest rate to shift, or float, along with the rest of the market, whereas a fixed interest rate stays constant until maturity. However, the assets have become less attractive as rates fell this year – 10-year Treasury bond yields are now at 2.19% after starting off at around 3.0% in January.
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.