Not all BBB bonds are created equal

The growth of BBB credit since the Global Financial Crisis has received a lot of attention.

Many argue, as we would, that maintaining BBB exposure is warranted given their superior income and return prospects. However, discerning credit analysis is key to maintaining sustainable exposure as not all BBBs are the same.  To briefly reframe the debate, the growing BBB market now represents roughly 50% of the total market capitalisation of investment grade (IG), with about $1trn of debt sitting one notch above high yield. Falling angels or Italian debt: Which BBB markets to avoid? Alongside this, leverage within the space has increased too. The rating agency justification for ...