06 Credit Sights Issuers & Sectors

US Corporate Credit Markets

• The US investment grade (IG) and high yield (HY) bond markets together represent nearly $10 trillion in debt.

• Other corporate credit markets include leveraged loans and private credit (like direct lending), to be covered in later modules.

Investment Grade (IG) Market

• Totals $8.4 trillion in debt outstanding.

• Second largest fixed income market after US Treasuries.

• Rated by Moody’s, S&P, and Fitch.

• Includes major public companies like Microsoft, Amazon, Apple, JP Morgan, Coca-Cola, etc.

• Contains ~1,300 companies.

Largest IG sectors

• Banks – 18%

• Healthcare – 9.6%

• Financial Services – 9.5%

• Utilities – 9%

• Leisure & Services – ~1% or less

High Yield (HY) Market

• Totals $1.4 trillion in debt.

• Includes ~900 companies.

• Composed of:

  • Fallen Angels (downgraded from IG).

  • Companies originally rated HY.

Largest HY sectors

• Energy – 12%

• Media

• Leisure

• Basic Industry

• Banks – <1% of HY market value (very small share)

What percentage of the total US investment grade corporate credit market is accounted for by just 105 companies?

• 10%

• 25%

• 50%

• 75%

50%

Which sector accounts for the largest share of total debt outstanding in the US investment grade market?

• Healthcare

• Financials

• Utilities

• Leisure

• Financials

Rank the following sectors by their share of market value in the high yield market from highest to lowest:

• Leisure

• Energy

• Banks

• Media

• Energy

• Media

• Leisure

• Banks

In the high yield market, what are some characteristics of companies that have been downgraded from investment grade? (Select all that apply)

• Known as 'fallen angels'

• Originally rated high yield

• Required to disclose financials publicly

• Sometimes have publicly traded equity

• Known as 'fallen angels'

• Sometimes have publicly traded equity