Fallen Angels are bonds that were downgraded from the Investment Grade universe and downgraded into the High Yield universe. What we have seen year to date are phenomenal amounts of downgrades taking place. Though caught between two worlds, Fallen Angels merit a permanent home in a strategic asset allocation.
A raft of recent US investment grade bond downgrades amid waves of market volatility is creating a potentially ripe area of investment in so-called fallen angels, say Mellon head of fixed income efficient beta Paul Benson and senior portfolio manager Manuel Hayes.
Today’s economic environment has prompted credit rating agencies to downgrade a substantial amount of debt from companies. However, with the right fundamentals, some bonds may offer compelling valuation opportunities, according to Paul Benson, head of fixed income efficient beta at Mellon.