An increasing number of corporate bonds are falling down the ratings scale, and default rates are picking up. How many are in the last chance saloon, just awaiting their ultimate demise, and should investors be worried?
As the global economy went into lockdown back in March, the ratings agencies responded with a wave of downgrades. The credit quality of the global corporate bond market as a whole fell the most it ever has since the birth of high yield (popularly known as junk) bonds in 1977. Companies that were previously rated investment grade - household names such as Ford, Renault, Rolls-Royce, Royal Caribbean, Kraft Heinz, British Airways, Marks & Spencer - are set to fall from grace in record numbers, tumbling over the cliff from BBB into BB, or junk territory. At the same time, the ranks of CCC...
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