Bond Influence in Stocks Spreads to Short Sellers Too: Chart

Companies perceived as riskier in the bond market can’t get a break from stock investors. After getting caught in the worst of last week’s equity selloff, companies with the lowest credit ratings are now staring down the biggest line of short-sellers in stocks. Data compiled by Bloomberg and Markit Ltd. shows that the shares of firms ranked weakest by Standard & Poor’s have twice as many bearish bets as the highest rung -- and that’s excluding energy and materials shares.

Once again, moves in the bond market are helping unveil investor sentiment in stocks. Lower-rated companies in the Russell 3000 Index have an average short interest of 5.4 percent of shares outstanding, compared with 2.7 percent for investment-grade companies, according to a Bloomberg analysis. Including energy and materials shares, stocks with investment-grade ratings have an average short interest of 2.9 percent, compared with 5.1 percent for those below investment grade.

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