Scorable AI Credit Risk Outlook 2023: Rising Stars to outnumber Falling Angels

Scorable, bondIT’s AI-driven Credit Analytics, indicates a sizeable amount of rating migrations for corporate and financial issuers in 2023 with Rising Stars set to outnumber Falling Angels. This is good news for investors who can catch rating upgrades early on as they can benefit from higher yields and price appreciation.  

As high market volatility persists though, investors need to be selective. Many companies had to clean up their balance sheets driven by the fallout from the Covid-19 pandemic and therefore enter the year from a position of relative strength, but the macro-outlook remains challenging. Anticipating directional credit changes early helps to effectively manage risk, discover new investment opportunities, and build portfolios that optimally balance risks and returns. 

Our latest analysis indicates that 45.7% of the nearly 200 BB+ rated issuers in the Scorable universe have a high or very high rating upgrade probability in the next 12 months, with most Rising Stars to occur in Europe and the US. 

Credit Risk across Regions: Around half of BB+ Issuers in Europe and the US could become Rising Stars in 2023 

 

The risk of Falling Angels is highest in Emerging Markets* where 20% of BBB- rated issuers display a high or very high downgrade probability. Across the globe, 11.8% of BBB- issuers in the Scorable universe are at risk of becoming Falling Angels within the next 12 months. 

Credit Risk across Regions: Risk of Falling Angels highest in Emerging Markets in 2023 

Scorable, bondIT’s credit analytics platform, harnesses machine learning and explainable-AI to predict downgrade and upgrade probability of nearly 3,000 rated corporate and financial issuers worldwide within a 12-month timeframe. The Rating Transition Model analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios. 

Want to find out which companies are most likely to become Rising Stars or Falling Angels? Log into Scorable now or contact our team for more info.
 

*Emerging Markets include Mexico, Brazil, Argentina, South Africa, Poland, Turkey, India, Indonesia, China, and South Korea.