The Tell: Don’t fear a coming wave of corporate bond-rating downgrades, says S&P

Investors are showing trepidation over a potential wave of rating downgrades for the lowest tier of investment-grade debt, but fears those bonds will turn into “fallen angels” might be overblown, at least for now, according to analysts at S&P Global Ratings.

“Investors are increasingly wondering about the potential for a market fallout if a sizable number of ‘BBB’ issuers were downgraded from investment grade to speculative grade. [We believe] these concerns are somewhat overdone for a number of reasons,” they said in a Wednesday note, citing the solid growth picture and small number of firms in danger of losing their high-grade status.

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