ELD's Borrow Cost Stays Elevated as Short Interest Collapses

ELD, the WisdomTree Emerging Markets Local Debt Fund, presents an unusual split this week: shorts have rapidly unwound while the cost of borrowing the fund remains stubbornly high — a mismatch that defines the current setup.

The sharpest move in the data is the collapse in short interest. Estimated shares short fell roughly 73% over the week to just under 1,945 shares — a fraction of the peak of nearly 13,600 shares seen in mid-April. That unwind has dragged the estimated short interest below 0.1% of the float, a level that is essentially negligible for an ETF of this type. The lending market confirms the reversal: borrow availability is extremely loose, with utilisation barely registering at 0.13% — the lowest it has been since mid-March, and a dramatic step down from a recent high of around 1.5% recorded at the start of April. The 52-week peak on utilisation was 79.8%, which underscores just how far the lending pressure has eased.

The cost to borrow tells a different story. Despite the near-total unwind in short interest, borrowing ELD remains expensive at around 22.5% annualised. That is actually down about 10% over the week and off the local highs of late March and early April, when the rate touched nearly 29%. But relative to the fund's underlying nature — a passively managed fixed-income ETF holding emerging market local currency bonds — a 22%-plus borrow rate is strikingly elevated. The persistence of that cost, even as short positions dissolve, points to ongoing structural tightness in the lending pool for this name.

The ORTEX short score has drifted lower through the week, moving from 36.7 in mid-April to roughly 34.8 today. That is consistent with the short interest unwind: the score, which aggregates borrow conditions and positioning signals, is cooling off gradually rather than sharply. Even at 34.8, however, the reading reflects a moderately active borrow market for what is a relatively small-volume ETF.

Options activity is thin but worth flagging. The put/call ratio registered 0.125 on April 29 — the first non-zero reading in over three weeks. The z-score relative to the 20-day average is extremely elevated at 4.4 standard deviations, though this is largely an artifact of near-zero options activity in prior sessions rather than a genuine surge in put buying. The absolute level of options volume in ELD is low enough that a single modest put trade can move the ratio dramatically. The reading is therefore more a curiosity than a conviction signal.

On the income side, ELD has been paying consistent monthly cash dividends of $0.145 per share, announced in December 2025 and covering payments through at least April 2026. At the current price of $28.555, that implies a monthly distribution yield of about 0.51% — or roughly 6% annualised — which is the principal driver of total return for holders of this local-currency EM debt fund. The fund slipped 0.66% on Wednesday and is down 2.4% over the week, trimming a month-to-date gain that had reached over 3%.

The key tension to watch is whether the elevated borrow cost normalises now that shorts have largely departed — or whether structural lending constraints in this niche corner of the ETF market keep it anchored above 20%.