Bond traders are growing concerned about “fallen angels,” or companies whose bonds have been downgraded to junk status, The Financial Times reports.
Moody’s cut more than 55 companies to junk status in the first half of 2016, The FT reported on Monday. The newspaper says there were 64 companies a downgrade away from junk at the end of Q2 and whose debt totalled US$294 billion, the most since the financial crisis.
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“The trend has been striking and credit does go through cycles, but there is a longer secular trend downward,” Chris Gootkind, director of credit research at Loomis Sayles, tells The FT.