BBBs and ‘Fallen Angels’: Hellish Risks or Heavenly Returns?


There has been a proliferation of press coverage in recent months about the growth of the triple-B rated corporate bond market. Some market participants are concerned that the next economic downturn could spark a wave of downgrades of companies rated BBB to high yield, with these ‘fallen angels’ potentially exposing investors to mark-to-market losses at best, and defaults at worst.

We think the risks have been grossly overstated, and that fears of a meltdown in BBBs are overdone. TwentyFour’s extensive analysis shows that far from being an asset class to be exorcised from portfolios, these bonds have consistently produced the very best total returns and the very best risk-adjusted returns across the global fixed income market.

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