Revenue and Issuance Analysis
Baa-Credit Concentration Has Grown, with Mitigating
Factors
Rated Debt of Baa U.S. Nonfinancial Companies Has
Almost Tripled Since 2007
2018 Baa-rated Debt Accounted for More than One-third of
The Total Rated Debt of U.S. Nonfinancial Companies
$2,500
2.4x
$2,000
$ Billions
$1,500
$1,000 $744
$500
$0
2007
3.0x
40%
3.0x
$2,040
30%
2.0x
20%
1.0x
10%
0.0x
0%
Aaa
Aa
A
■ 2007
Baa
■ 2018
Ba B
Caa-C
2008
2009
2010
2011
2012
2013
2014
2015
Debt/ EBITDA
2016
2017
2018
Face Value of Rated Debt
2018 Potential Fallen Angels¹ Accounted for $0.1 Trillion of the
$2 Trillion of U.S. Baa-Rated Nonfinancial Debt Outstanding
$0.1 ■ Potential Fallen Angels
$1.9
Ratio of Potential Fallen Angels¹ to Potential Rising Stars¹
Trends Downward Globally
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Q4-2013
Q2-2014
Q4-2014
Q2-2015
Q4-2015
Q2-2016
Q4-2016
Q2-2017
Q4-2017
Q2-2018
Q4-2018
Q2-2019
1.
$ Trillions
Q2-2012
Q4-2012
Q2-2013
As compared to 2007, 2018 representative median companies generated more revenue ($4.7B to $7.1B),
with improved EBITDA margins (20% to 24%) and EBITDA / Interest Expense ratios (7.0x to 8.2x)
Source: Moody's Investors Service.
Fallen Angels and Rising Stars fall within the "The Crossover Zone" which refers to the ratings closest to the line between speculative grade and investment grade. Companies in
the zone are rated Baa3 or Ba1. To be considered in the zone, companies rated Baa3 must be on review for downgrade or have a negative outlook, while companies rated Ba1
must be on review for upgrade or have a positive outlook.
MOODY'S
November 4, 2019
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