BBBetter

7 October 2019 By Anna Szymanski Follow @Three_Guineas

Over half of U.S. investment-grade corporate debt is rated BBB, one level above junk. This has alarmed observers from the Fed to Pimco who fear U.S. companies could struggle in a downturn. But BBBs are not all created equal. Many such borrowers boast improving credit metrics.

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Corporate debt worth $434 billion was issued globally in September, the highest level on record, with $153 billion denominated in U.S. dollars, the third-highest on record, according to Bloomberg.

Total outstanding corporate debt in the United States is currently over $9 trillion. The total amount of investment-grade debt was $6.7 trillion as of January 2019, according to Standard & Poor’s.

Notes and bonds represent over 80% of the $3.8 trillion of BBB-rated U.S. corporate debt outstanding, according to S&P. The remainder is comprised of loans and revolving credit facilities.

Since 1981, the median credit rating of a company five years before a default is B-plus, according to S&P.

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