The Wall Street Journal: Investment-Grade Bonds Could Turn to Junk Amid Global Rout

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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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.