Home Business Blackstone, State Street Create ETF For HY Loans

Blackstone, State Street Create ETF For HY Loans

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

The Blackstone Group L.P. (NYSE:BX) and State Street Corporation (NYSE:STT) are teaming up to create an exchange-traded fund for speculative-grade loans as investors dump more and more cash into riskier investments that come with a higher yield. Recent increases in subprime auto loans and corporate bonds have also been noted.

Blackstone, State Street Create ETF For HY Loans

The new ETF is the SPDR Blackstone / GSO Senior Loan, and it just started trading on the New York Stock Exchange Arca today. A press release from the two companies indicates that it’s managed by GSO Capital Partners, which is The Blackstone Group L.P. (NYSE:BX)’s credit investing arm, and State Street Corporation (NYSE:STT)’s unit State Street Global Advisors.

According to Bloomberg, leveraged-loan issuance set a new record high during the last quarter, reaching $278.9 billion. The new ETF is apparently the third fund like it that was created with the purpose of buying loans. The first loan ETF was created two years ago by Invesco Ltd. (IVZ). Bloomberg reports that that ETF’s market capitalization went past $3 billion last week.

Many investors are turning to loans as a safer investment as interest rates rise because loans are often connected to floating-rate benchmarks. So as rates go up, fixed-rate securities decline in value.

Data from JPMorgan Chase & Co. (NYSE:JPM) indicates that approximately $15 billion has been placed into funds which buy leveraged loans already this year. That’s just $3 billion away from the record amount, which was set in 2010. Wednesday’s price was $98.33 cents on the dollar, and the Standard & Poor’s / LSTA U.S. Leveraged Loan 100 Index indicates that this number was the highest since July 2007.

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Michelle Jones
Editor
Dividends

The Top Vanguard ETFs for Dividends

Dave Kovaleski10 hours

With concerns over market choppiness, investors can find good values in these excellent dividend ETFs. Dividend stocks and exchange-traded funds, or ETFs, are more popular investments when markets are volatile,...

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.