Fallen angels: This time is different
April 21, 2020

Fallen angels: This time is different

Megan Rand. Senior Research Analyst, Mike Kelley. Head of Global High Yield Research and Stuart Stanley. Senior Portfolio Manager

Around USD 159 billion or US investment grade debt has been downgraded from investment grade to high yield so far this year, with most downgrades taking place in March. These so-called “fallen angels” owe their drop in credit status to the twin pressures of the country-wide pandemic related lockdowns and the collapse in oil prices caused by a simultaneous supply/demand shock.

Invesco Fixed Income expects the total volume of fallen angels to reach around USD 216 billion in 2020, well above the prior record of USD 141 billion set in 2009. We look at the recent rise in fallen angels from the dual perspectives of the investment grade and high yield markets and highlight why this cycle might differ from the past.

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