The bulk of bonds that have fallen below investment grade in the past 16 years have failed to return to an investment-grade rating, according to a Standard & Poors study released today. "One quarter of global fallen angels investment-grade issuers rated BBB- and above that have been downgraded to speculative grade BB+ and below in the past 16 years returned to investment grade status, the study said. Three quarters of the bonds did not return to an investment-grade rating.
Traditional high-yield managers, including mutual funds and money managers, "do not automatically step in as buyers of fallen angels, the study said. "Concentrations of issuers returning to investment grade are most likely to come from the financial, consumer products, high technology and retail/restaurants sectors, based on the number of issuers with a BB rating and with either a positive or stable outlook or listed on CreditWatch with positive implications.