Barclays, under the guidance of Bradford Elliott, anticipates a continuation of the trend from 2021, with more companies being upgraded to investment grade outpacing those downgraded to junk in 2024. The bank projects $70 billion to $90 billion in rising stars, compared to $20 billion to $40 billion in fallen angels. This forecast underscores the sturdy fundamentals of issuers and the resilience of the US economy, even amidst high-interest rates set by the Federal Reserve.
The data provided by Barclays shows the fewest fallen angels since 1998 over the last three years. Companies holding BBB debt have demonstrated prudence by bolstering cash reserves and curtailing share buybacks and growth in capital expenditure (capex).
Ford Motor Co . (NYSE:F), currently holding speculative grade, is poised for an upgrade to investment grade soon, making it the largest-ever rising star. This indicates a robust high-yield market and index, implying that other companies are also well-positioned for upgrades. These positive trends are supported by improvements in GDP and manufacturing Purchasing Managers' Indexes (PMIs).
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