Fallen Angels Stoking Junk-Issuer Credit Risk, Moody's Says

Former investment-grade companies are contributing to a surprising number of higher-ranked junk-bond issuers showing early signs of distress, according to Moody’s Investors Service.

So-called fallen angels swelled the number of at-risk companies to 22 percent of firms with Moody’s second-highest junk grade, analysts led by Gianmarco Migliavacca said in a statement Tuesday. Downgraded firms wouldn’t ordinarily be expected to show early default signs as they usually retain some investment-grade characteristics, such as a strong business profile, the analysts wrote.