Economic fallout from the novel coronavirus and collapsing oil prices are sparking steep declines in the $3.4 trillion market of corporate bonds with triple-B credit ratings, writes Matt Wirz for The Wall Street Journal, citing Credit Benchmark data. The article suggests that a large proportion of investment-grade bonds could drop into high-yield territory under current economic pressures.

“Banks surveyed by Credit Benchmark are rating about 30% of corporate borrowers they lend to at triple-B and 30% at double-B, the top junk category. In contrast, ratings firms still have 42% of their ratings at triple-B and 12% at double-B, suggesting that many triple-B bonds are highly susceptible to rating-firm downgrades, according to Credit Benchmark.”

The Wall Street Journal, March 13, 2020.

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