- According to S&P, the average corporate credit rating is BB-, or two notches below investment grade. A 15-year low means this gauge is weaker today than at the height of the financial crisis.
- At work here - beside the raft of energy and commodity-related downgrades - are easy corporate lending conditions which allow those companies with weaker credit ratings to tap the borrowing market.
- Unfortunately, says S&P, lower-graded issuers seeking to refinance in the coming months are going to find less welcoming conditions. "A recalibrated, smaller, and more conservative lending environment, where restricted capital market access will enable lenders to better dictate terms and conditions, could prompt liquidity challenges, accelerate downgrades, and ultimately lead to a spike in defaults."
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