December 24, 2020
Until March of this year, credit investors had ten years’ worth of strong returns and low risk. Corporate fundamentals had largely remained resilient in the face of the COVID-19 pandemic. That Corporations have demonstrated capital discipline while investors provided technical support amid a low yield environment, and dovish monetary policy allowed for corporate refinancing.
In a report from DWS, “The Opportunities and Risks of Fallen Angels Investing,” it is said that while strong demand for new issuance has helped corporates navigate this economic downturn, downgrade potential remains a key risk for the investment-grade corporate bond market. More notably, the relevance of “Fallen Angels,” or corporate bonds that are issued with investment-grade ratings but are then downgraded to high yield (below BBB-), remains a high-profile topic. In the first half of 2020 alone, Fallen Angels U.S. debt has totaled $206 billion versus $38 billion for the full yea