LONDON (Reuters) – The coronavirus pandemic has pushed the number of companies at risk of having their credit ratings cut to ‘junk’ to the highest since during the global financial crisis, figures from S&P Global showed on Thursday.
Globally, the tally of ‘fallen angels’ — companies or countries whose ratings have been cut to below investment-grade — has already jumped to 23, the highest since 2015, from just 2 at the end of January.
The list of potential fallen angels has grown substantially as well, especially in sectors where revenues are under pressure from measures to halt the spread of the new coronavirus, such as social distancing and the abrupt shutdown of travel.
S&P said that in March alone, 43 names were added to the list of potential fallen angels, and with 20 more in the first two weeks of April, the total now stands at 96 — the highest count since the financial crisis.
Becoming a ‘fallen angel’ can set off a wave of problems.
It automatically excludes the country or company’s bonds from certain high-profile investment indexes, which means conservative funds — active managers as well as passive “trackers” — are no longer able to buy and sell them.
It can also cut the bonds’ value as collateral in central bank funding operations.
Graphic – Fallen angel risk at highest since financial crisis: https://fingfx.thomsonreuters.com/gfx/mkt/qmypmwedpra/Pasted%20image%201587054358364.png
(Reporting by Marc Jones; Editing by Catherine Evans)
