Bond traders are growing concerned about “fallen angels,” or companies whose bonds have been downgraded to junk status, The Financial Times reports.
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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.