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Rise of the 'Fallen Angels'

Bonds of companies that recently dropped from investment-grade to high-yield have been outperforming the corporate-bond market overall.

By Lisa Abramowicz | Updated on February 23, 2015

Sometimes, it pays to dabble in something that’s just a little bad in the bond market.

Companies that were once investment-grade rated and have since plunged into junk territory are offering some of the best returns in U.S. credit markets. So-called fallen angel securities have gained about 8 percent in the past 12 months, and 3 percent in 2015 alone, according to Bank of America Merrill Lynch index data.

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