Bond ETF premiums widened on Columbus Day, then narrowed
State Street refused creation and redemption orders on Oct. 12, and ProShares has posted for Veterans Day the no-creation line it set for Columbus Day.
Key takeaways
On Monday, Oct. 12, State Street refused to create or redeem shares in a list of its fixed-income ETFs, and the shares kept trading. In two of those funds, the price moved further above the value of the holdings, and the gaps narrowed in the sessions after.
An exchange-traded fund does not sell you a share at the value of what it holds. The shares trade at a market price, and net asset value, or NAV, is that value divided by the number of shares. A premium is a share price above NAV, and a discount is a share price below it.
The fund grows or shrinks only when an authorized participant, a firm allowed to deal with it directly, delivers a creation unit or takes one out. A creation unit is the block of shares the fund will issue or take back. Issuing those shares is what meets a premium, and taking them back is what meets a discount.
On Monday, State Street was taking neither order. The shares kept trading on the exchange.
The Securities Industry and Financial Markets Association had confirmed, on Sept. 29, an earlier recommendation for a full close that day for the trading of U.S. dollar-denominated fixed-income securities in the United States, the United Kingdom and Japan. Each firm, SIFMA said, should decide for itself whether its fixed-income departments stay open for trading.
State Street's notice to authorized participants was dated Oct. 7, and it covered only Monday's trade date.
"Due to the fixed income market holiday (Columbus Day) on October 12 2026, no orders will be accepted for the following ETFs to create or redeem Creation Units for that trade date:"
The list includes State Street SPDR Portfolio Long Term Treasury ETF SPTL and State Street SPDR Bloomberg High Yield Bond ETF JNK. Municipal-bond funds and loan funds are on it as well.
ProShares posted a public schedule, dated Oct. 12, for a row of funds that includes ProShares UltraShort 20+ Year Treasury TBT.
"No creations allowed. In-kind redemptions allowed, if available. New NAVs will be calculated."
In-kind means the firm turns a creation unit in and takes the underlying bonds, rather than cash. ProShares allowed that redemption if the basket was available. It did not allow a creation.
ProShares also said a new net asset value would be calculated, and State Street published a Monday figure for JNK. The gaps below compare each session's price with that session's value.
Monday's premiums narrowed after
YCharts, a market-data service, put the daily premium on SPTL at 0.03% on Oct. 9 and at 0.10% on Monday. From Oct. 1 through the Friday before the holiday, those readings had been no higher than 0.05%.
On Friday, Oct. 16, the fund closed at $24.45, a penny above that session's net asset value of $24.44, a gap of 0.04%.
JNK closed Monday at $92.93. State Street's net asset value for that day was $92.68. A buyer at that close paid 0.27% more than State Street's published value, $0.25 a share, and the firm was not taking a creation order to meet it.
In YCharts' daily readings from Sept. 16 through Oct. 16, Monday was the widest premium. The Friday before had been 0.18%. On Oct. 13 it was 0.14%, back inside the prior week's readings, which ran from 0.11% to 0.18%.
Both funds' premiums peaked on the shut day
- Oct. 9
- Oct. 12
- After
- SPTL
- Oct. 9 0.03%
- Oct. 12 0.1%
- After 0.04%
- JNK
- Oct. 9 0.2%
- Oct. 12 0.3%
- After 0.1%
Our read is that the two State Street funds took a one-day strain. The price drifted while creations were refused, and the gaps narrowed once that trade date was over.
SIFMA's holiday schedule lists Wednesday, Nov. 11, Veterans Day. ProShares has posted the same limits for that day, on the same row of funds.
A premium in those funds will not be met with new shares. An in-kind redemption is still allowed, if the basket is available.
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ETFs in this story
Frequently asked questions
Why did bond ETF premiums widen on Columbus Day?
State Street wasn't taking creation orders that day, so no new shares could be issued to close the gap as prices moved above net asset value.
Did the ETFs stop trading on the holiday?
No, the shares kept trading on the exchange even though State Street refused creation and redemption orders.
How large was the premium in the high-yield fund?
State Street SPDR Bloomberg High Yield Bond ETF closed at $92.93 against a net asset value of $92.68, a premium of 0.27%, or $0.25 a share.
Will the same thing happen on Veterans Day?
ProShares has posted the same limits for Nov. 11 on the same row of funds: no creations, but in-kind redemptions allowed if the basket is available.
