Doubt over bond pricing index as markets spiral

Corporate bond funds could be facing large write-downs due to pricing discrepancies caused by money ...

Corporate bond funds could be facing large write-downs due to pricing discrepancies caused by money market volatility. Old Mutual's Stephen Snowden said he believes a "significant proportion" of bond prices are wrong by a material amount. "Pricing bonds at 10%-20% higher is not uncommon, which is a lot in this asset class," he added. This is because unprecedented and rapid market movements have rendered the iBoxx index inaccurate in many cases. He explained iBoxx was the most widely used pricing method by bond managers prior to the credit crunch. Snowden said: "It works by collect...