Nissan downgrade seen as start of 'fallen angels' cycle

WASHINGTON : The downgrade of Nissan Motor's credit rating from investment grade to junk by S&P Global on Tuesday marks the start of a cycle that could see as much as $55 billion of so-called"fallen angels" this year, said fund managers.

S&P cut Nissan's rating by one notch to BB+ or junk, saying its profitability will remain weaker than global peers as softening demand for new car sales in the U.S. and Europe would pressure sales prices. Nissan had $10 billion in outstanding U.S. dollar bonds, making it the largest fallen angel since 2020, said BofA Global Research in a report on Tuesday.

Some 0.8 per cent of the investment-grade bond index, or $55 billion, was seen at risk for downgrades and already trading at the BB-rating band or junk bond levels, the report said.

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