Very few Spanish funds to face liquidity issues in extreme outflow scenario: CNMV

On the 01/13/21 at 7:42AM


Adrien Paredes-Vanheule

The Spanish financial market authority Comisión Nacional del Mercado de Valores (CNMV) released on Tuesday an analysis of the results of liquidity stress tests carried out in Spanish investment funds. The tests aimed to identify which funds would encounter liquidity issues in various economic shock scenarios implying massive investors outflows. In the most extreme scenario, CNMV said only eight Spanish funds out of 452 (or 1.77% of the total) would face liquidity troubles. The eight funds represented 3.9% of Spanish corporate bond fund assets, 0.5% of Spanish mixed bond fund assets and 0.2% of "other" fund assets. CNMV specified that corporate bond funds investing largely in high yield debt were particularly at risk.

The regulator's stress tests took into account data available until June 2020 for each fund. The weighted average of liquid assets for most fund categories amounted to around 50% of the funds' assets, CNMV explained in a report. However, it also pointed out that in all Spanish fund categories, it recorded a certain percentage of funds with a liquidity ratio well below average, espacially funds invested in sovereign bonds and mixed bond funds invested in corporate and sovereign bonds.