Brian Chappatta, Columnist

Ford’s Downgrade to Junk Revives ‘Fallen Angel’ Fears

The automaker has characteristics similar to other companies that are legacy household names.

September 9, 2019 at 9:41 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Investors will have to reassess risk factors they had disregarded.
Photographer: Georges Gobet/AFP/Getty Images

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The downgrade of Ford Motor Co.’s debt to junk by Moody’s Investors Service on Monday will most likely spark a fresh wave of soul-searching among investors about the risk of highly leveraged companies that are clinging to investment-grade ratings.

Moody’s cut Ford’s credit rating one level to Ba1 from Baa3. If it’s downgraded to junk by either S&P Global Ratings or Fitch Ratings, it will officially become a “fallen angel,” with its debt sent away to high-yield indexes.