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Fallen Angels or Red Herrings?

10.25.2019

Fallen Angels or Red Herrings?

The confluence of continued market volatility with an aging credit cycle have accentuated credit investors’ focus on downward rating migration in the investment grade corporate credit market. While most of the attention in the investment grade market has been concentrated on fallen angels, downward rating migration within higher-rated categories of the investment grade corporate index garners much less attention. Nonetheless, the proportion of single-A and higher rated debt in the Bloomberg Barclays U.S. Investment Grade Corporate Index has persistently declined over the past few decades, thereby significantly reducing the universe of higher-quality investment opportunities.

In the following publication, we highlight  key questions investors should ask, including: what is currently driving credit migration, what are the segments most at risk, and are investors adequately compensated for the increased credit risk from downgrades?

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