Rising Stars: Which Sectors are COVID Winners?


COVID-19 has caused major economic damage, especially in sectors connected with travel and leisure.  But in manufacturing and technology there will be some strong winners: increased factory automation, major house-building and property conversion programs, increased demand for private cars, new software to facilitate social distancing in a broad range of situations, and major supply chain restructuring.

The most recent Consensus credit data gives some insight into how these winners are already emerging.

Figure 1 shows the proportion of Global Corporate companies that were in Non-Investment Grade credit categories in February 2020 and are now viewed as Investment Grade.

Figure 1: Rising Stars Sectors

The overall rate is 3.7% – less than half of the “Fallen Angel” rate.  Top of the list is Aerospace and Defense with a rate of 15.6%; followed by Electricity (9%) and Fixed Line Telecommunications (8.8%).  Mining, Personal Goods, Food & Drug Retailers, Support Services and Beverages are all above 5%.  Construction & Materials (4.5%), and Software & Computer Services (3.9%) are also positive.

The bottom of the list includes Tobacco, Forestry & Paper, Alternative Energy, Oil Equipment, Health Care Equipment, Food Producers and Automobiles & Parts.

Some of these may seem surprising, but the position of each sector in this list is partly determined by the proportion of companies that are already Non-Investment grade.  Health Care Equipment, for example, is heavily skewed towards Investment Grade. 

Aerospace and Defense is dominated by companies in the bbb category, with equal proportions on either side in the stronger and weaker credit categories.  Many airlines are in the process of converting their passenger aircraft to carry freight, which along with financial assistance in the form of government bailouts, may partly explain the strong improvement in some companies in an otherwise badly-hit sector.

Construction & Materials is dominated by companies in the bb category, and very few that are better than a.  The trend towards upgrades is likely to continue over the next 12 months with the need for new infrastructure adding to the impact of Government stimulus packages.

Sovereign Bond Risk Management

In the current low yield environment, many Sovereign bonds issued by different countries are priced at similar levels. However, this Read more

Introduction For Credit Portfolio Managers

Credit Benchmark is a market-led response to three of the most critical issues facing credit risk professionals: 1) The need to Read more

Sovereign Default Risk In Developing Economies

This paper examines the use cases for Credit Benchmark’s Consensus Probabilities of Default (Consensus PDs), in the context of more Read more

Impact Of BCBS Proposals On IRB Banks

The Basel Committee on Banking Supervision recently published wide-reaching proposals for reducing variation in Credit Risk Weighted Assets, with a Read more


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.