A Diverse Landscape of Risk and Opportunities Makes Diligent Bond Selection Crucial for Investment Success

bondIT, a leading provider of credit analytics and next-generation investment technology, has unveiled its latest Scorable AI Industry Credit Risk Indicator report for Q1 2024, shedding light on a challenging economic landscape characterized by a mix of risks and opportunities. 

Our latest analysis names the Consumer Goods sector as the industry with the highest aggregate downgrade risk at 22%. Noteworthy improvements have been seen in Household Goods (19%), Household Products (18%), Real Estate (17%), and Apparel & Textile (16%), which have transitioned from the maximum risk to the high-risk category compared to the previous quarterly risk report. 

Retail and Food have shifted from the high-risk category to medium risk, reflecting a decrease in aggregate downgrade risk to 14%, respectively. 

As we step into 2024, the global economy presents a varied picture. The International Monetary Fund (IMF) has recently revised upwards its global economic growth forecast, citing improved prospects for the United States and China. However, Europe, particularly the euro area, lags behind with a downgrade in growth projections. While a “soft landing” is expected, downside risks persist. 

Despite slight improvements in credit risk across industries, our recent analysis on Falling Angels has revealed an increase in the risk of Falling Angels in Europe and a minor uptick in the US, emphasizing the nuanced and complex credit risk environment. For investors it is therefore crucial to scrutinize credit risk at a single issuer level. 

“As credit risk undergoes shifts across sectors, staying ahead of the curve is imperative. Amidst challenging market conditions, the higher yields in fixed income genuinely present opportunities for investors. Successfully navigating this fast-changing environment requires a proactive stance, where investors must make data-driven choices to capitalize on these potential opportunities,” says Dr David Curtis, Head of Global Client Business at bondIT. 

Navigating Volatility with bondIT’s Scorable Platform 

In the backdrop of volatile credit conditions, staying informed about the changing risk landscape becomes crucial for investors. bondIT’s credit analytics platform, Scorable, utilizes machine learning and explainable-AI to predict downgrade and upgrade probabilities of nearly 3,000 rated corporate and financial issuers worldwide within a 12-month time frame. 

The Rating Transition Model analyzes over 250 data variables daily, including solvency ratios, capital requirements, profitability, and efficiency ratios. The platform provides actionable insights for investors, allowing them to monitor corporate bond ratings and spreads, anticipate rating changes, and identify investment opportunities ahead of the market. 

Want to get access to Scorable to check which issuers are at most at risk and where opportunities lie? Contact the bondIT team for more info.