The rays of light within credit markets are slowly growing. Known as Rising Stars, companies moving from high-yield or “junk” to investment-grade status are increasing across many sectors.

The number of Fallen Angels – companies whose credit quality has shifted from investment-grade to high-yield or “junk” status – continues to increase, yet each update brings a smaller total number than the last.

Amid an onslaught of negative credit news, there are some bright spots. So-called Rising Stars, sectors whose credit quality has moved from high-yield or “junk” status to investment-grade, are growing, slowly but surely.

Fallen Angels – companies whose credit quality has shifted from investment-grade to high-yield or “junk” status – continue to grow in number but at a slower pace than what we’ve been seeing for the past several months.

The ranks of the Fallen Angels – firms whose credit quality has made the shift from investment-grade to high yield, or “junk” status – continue to grow, but the pace may be slowing down.

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

Rating agency downgrades have hit unprecedented levels over the past few months, but the majority of the downgrades have been for companies that were already classed as high yield. Fallen Angels – companies that cross the boundary from Investment Grade to Junk – are still in a minority, as agencies (and their corporate clients) display an understandable reluctance to avoid the “BBB cliff”.

Rating agency downgrades have hit unprecedented levels over the past few months, but the majority of the downgrades have been for companies that were already classed as high yield. Fallen Angels – companies that cross the boundary from Investment Grade to Junk – are still in a minority, as agencies (and their corporate clients) display an understandable reluctance to avoid the “BBB cliff”.