Is Corporate Credit Quality Improving? Fewer Fallen Angels, More Rising Stars

The COVID era has caused corporate credit quality to shift rapidly between investment-grade and high-yield in either direction – and for some companies, to shift right back again, suggesting a premature upgrade or downgrade. But the latest data from Credit Benchmark suggest consensus estimates may be improving overall.

The ranks of Fallen Angels, which are companies that have seen their credit status change from investment-grade to high-yield, continue to increase. Now a total of 1,051 companies out of a global sample of 6,895 (15%) have deteriorated to high-yield at some point over the last year, up from 1,009 in the last update. However, only 734 (11%) of these Fallen Angels remain in high-yield status, essentially unchanged from last month’s figure of 733. Thus, 317 (5%) have migrated back to investment-grade, up from 276 last month.

In the Fallen Angels category, the latest data show that sectors which are heavily consumer oriented continue to show the largest credit movement. The Travel & Leisure group has seen 50% of its constituents drop into high-yield at some point but 11% have since shifted back to investment-grade status. Personal Goods is right behind with 28% of constituents falling into high-yield, and 9% reverting back to investment-grade. Travel and leisure activities are still hampered by COVID, and the retail sector remains in flux [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.

Please complete your details to continue reading this report:

    By clicking the "Submit" button, you are agreeing to the Credit Benchmark Terms of Use and Privacy Policy.

    Download Full Report

    Follow us on:

    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.