Mortgage Bond Sales Overwhelm The Credit Markets
March 23, 2020 9:39 AM
Navi Persaud

The crisis in credit markets continues to increase with an influx of mortgage bonds that are being sold, in hopes to meet investor redemptions. These mortgage bonds assets are in the billions and now, pleas for government intervention are on the rise.

"The sales included at least $1.25 billion of securities being listed by the AlphaCentric Income Opportunities Fund on Sunday, according to people with knowledge of the sales," according to Yahoo Finance.

"It sought buyers for a swath of bonds backed primarily by private-label mortgages as it sought to raise cash, said the people, who asked not to be identified discussing the private offerings. The fund plunged 17% on Friday, bringing its total decline for the week to 31%."

The crisis has been brought on by the effects of the coronavirus, which has caused a series of severe market dislocations and liquidity issues, according to the report.

"The [f]und is not immune to these dislocations" and "like many other funds, is moving expeditiously to address the unprecedented market conditions,” said AlphaCentric’s Jerry Szilagyi, according to the report.

Many sectors of the mortgage industry have been in somewhat of a limbo as of recently. We also posted a report that claimed commercial real estate mortgage could be in trouble, most of which are direct effects from the COVID-19 crisis. To learn more about why government intervention is being sought after as mortgage bonds continue to flood the markets, click here.

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