COVID Crisis Continues to Shuffle the Deck on Corporate Credit Quality

Fallen Angels and Rising Stars

The COVID-19 crisis continues to spark a great deal of volatility in corporate credit sentiment, according to Credit Benchmark consensus data.

The ranks of the so-called Fallen Angels, or companies that have seen their credit scores fall from investment grade to high-yield status, have swelled over the course of the last 12 months. The latest monthly update finds that a total of 1,009 firms out of a global sample of 6,895 (about 15%) have deteriorated to high-yield status, and, of that group, 733 (about 11%) still carry this label, meaning that 276 (about 4%) that have migrated back to investment-grade.

The month-to-month movement in credit quality is most pronounced in sectors influenced by supply chain and consumer disruptions. Beyond the usual suspects like Travel & Leisure, Automobiles & Parts and General Retailers have also seen considerable movement. Each sector saw roughly 20% of firms fall from investment-grade to high-yield status and currently about 13% of each sector is still classified as such. Overall credit quality for the Automobiles & Parts and General Retailers sectors on a global basis have each declined by about 30% over the last 12 months.

Of course, just as some firms and sectors see deterioration, others see improvement. The latest update shows that the number of firms whose credit quality was high-yield but then moved to investment-grade – so-called Rising Stars – grew to 396 out of a global sample of 6903 (about 6%) over the 12 month period [please continue below to access full report].

Fallen Angels – Sector Comparison

Credit Benchmark data is now available on Bloomberg – high level credit assessments on the single name constituents of the sectors mentioned in this report can be accessed on CRPR or via CRDT . Get in touch with us to request your free trial for Credit Benchmark Premium Data and Analytics on Bloomberg.

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    Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.