Investors have been worrying about companies with credit ratings that are close to junk. But the bigger problem could be those higher up the credit-quality scale.
Debt with credit ratings of BBB and BBB- now make up nearly 30% of the $5tn investment-grade bond market, by CreditSights’ measure. When an economic slowdown hits, or so the theory goes, a wave of downgrades will inundate the $1.2tn high-yield bond market with supply and cause a selloff.
