More Bonds Are Being Cut to Junk in Latest Sign of Credit Cracks

More of the corporate bond market’s angels are losing their wings.

About $42 billion of US corporate bonds this year have dropped from investment-grade to junk status, known as becoming “fallen angels,” according to Barclays Plc. That’s up from $6 billion last year, and is on track to outstrip the value of “rising stars” — companies upgraded to investment-grade — for the first time since 2020.

The wave of bonds losing their high-grade status is only set to grow next year. The percentage of bonds in the lowest tiers of investment grade — a BBB or BBB- rating — ...