Industry fears market turbulence will lead to surge in 'fallen angels'

Covid-19 and oil price plunge spook investors

Beth Brearley
clock • 4 min read

Concerns surrounding an increase in 'fallen angels' have ramped up amid the recent market turbulence, according to fixed income investors, who warn that debt at the lower end of the investment-grade spectrum is most vulnerable to being downgraded and relegated to the high-yield market.

The combination of the Covid-19 crisis and plummeting oil prices have rattled markets and are driving the global economy towards a recession. While the US Federal Reserve's unprecedented move last month to buy corporate bonds has been well received, it is not seen as being sufficient to prevent widescale downgrades. Into the void: Recession will be 'deepest peak-to-trough decline in recent memory', experts warn Sean Markowicz, strategist, research and analytics at Schroders, has estimated between $277bn to $561bn of BBB debt could be downgraded, with losses at the investment grade ...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Industry

What to expect at the upcoming Autumn Budget

What to expect at the upcoming Autumn Budget

Round-up of potential reforms

Investment Week
clock 25 October 2024 • 1 min read
Evelyn Partners CEO Geddes warns of 'stifling' CGT change impact

Evelyn Partners CEO Geddes warns of 'stifling' CGT change impact

Urges for caution on tax changes

Jen Frost
clock 21 October 2024 • 2 min read
IA urges UK, EU and Swiss regulators to align T+1 settlement rollout timeline

IA urges UK, EU and Swiss regulators to align T+1 settlement rollout timeline

Before the end of 2027

Valeria Martinez
clock 16 October 2024 • 2 min read
Trustpilot