With global growth having collapsed under the impact of the coronavirus, rating agencies have been swift to downgrade companies, with many sizeable issuers already falling into high yield and more are expected in the coming months. Rather than a threat, Allianz believe this could be an attractive opportunity for canny investors. Credit spreads are currently pricing in close to the worst downgrade data seen over the last 30 years and more than compensate for the downside risks in BBB-rated issues.
We also observe that fallen angels typically outperform as economies emerge from recession.
