Bloomberg: Sometimes it helps to have a sinner on your team. Energy stands out in the high-grade credit rally.
I made a portfolio of bonds that were in the investment-grade index at the end of last year, still had BBB composite ratings as of the end of February but that are now junk. A month ago, newly downgraded names were underperforming both high grade and junk. This time they’re going gangbusters. For comparison, I created a portfolio of bonds in the Bloomberg Barclays Baa Corporate index from the end of last year that still retain investment-grade ratings (virtuous angels), and another of the bonds that were already in the Bloomberg Barclays Ba U.S. High Yield index in December (unrepentant sinners).
I made a portfolio of bonds that were in the investment-grade index at the end of last year, still had BBB composite ratings as of the end of February but that are now junk. A month ago, newly downgraded names were underperforming both high grade and junk. This time they’re going gangbusters. For comparison, I created a portfolio of bonds in the Bloomberg Barclays Baa Corporate index from the end of last year that still retain investment-grade ratings (virtuous angels), and another of the bonds that were already in the Bloomberg Barclays Ba U.S. High Yield index in December (unrepentant sinners).