

‘Fallen angels’ pose little threat to EU funds
Actively managed bond funds in the European Union would be resilient to a credit shock that turned a hefty chunk of their holdings to junk status – but passive funds would be forced to panic sell, dramatically impacting debt prices.
The European Securities and Markets Authority (Esma) simulated the effects of a sudden blow-out of credit spreads and rating downgrades on EU funds. The scenario imagined a shock that turns 11% of global BBB-rated debt into ‘fallen angels’ – investment-grade bonds
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