(Bloomberg) — An upgrade of Ford Motor Co.’s credit rating to investment grade is signaling a shift in corporate priorities as companies shore up their finances in the face of a potential recession.
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The US automaker this week clinched a blue-chip grade from S&P Global Ratings, a move that lifts Ford’s debt out of junk and stands to shrink a global benchmark of high-yield bonds by $46.8 billion, the most since the mid-2000s. To some on Wall Street, that’s just the beginning.
“There’s still more to come,” said Matt Brill, head of North America investment-grade credit at Invesco Ltd. “We’re more likely to see improving credit fundamentals, even as the economy slows — rather than the opposite, which is what a lot of people are concerned about.”
That’s a complete turnaround from early in the pandemic, when credit assessors delivered the most brutal wave of corporate-debt downgrades on record. Already, credit upgrades this year have decreased the amount of so-called fallen-angel bonds — or debt that was cut from investment-grade to junk — to $142 billion from as much as $344 billion in 2020, according to ICE BofA index data analyzed by Bloomberg.
And even as the focus settles on the risk of a recession as major central banks keep interest rates elevated, strategists at Bank of America led by Yuri Seliger see few indications that the number of fallen angels will rise again. Less than 0.5% of the investment-grade universe trades at spreads wider than their junk-rated peers, they wrote in a note earlier this month.
“The fallen angel pipeline seems to be quite thin,” unlike in previous economic cycles, said Maria Staeheli, a senior portfolio manager at Fisch Asset Management. “This time around, it feels like more companies are able and willing to take credit friendly action to keep IG ratings.”
Barclays Plc strategists led by Bradford Elliott, in fact, expect $70 billion to $90 billion of debt to be lifted from junk to investment grade — a type of upgrade that dubs the debt as rising stars — in 2024. Coty Inc., Cellnex Telecom SA and British retailer Marks & Spencer Plc are all in line for potential rising-star upgrades, according to the firm.
Representatives for Coty, Cellnex and Marks & Spencer didn’t respond to requests for comment.
The strategists, meanwhile, see only $20 billion to $40 billion of debt going from a high-grade score to high-yield next year. Others, though, are still bracing for pockets of weakness.
The increase in positive rating activity comes ahead of what’s expected to be a much more difficult time, Bloomberg Intelligence analyst Joel Levington said in an interview Tuesday. Still, bond graders are betting there’s enough cushion in their ratings to absorb downside, he said, adding that “there’s a lot of questioning of that logic.”
In Europe, Barclays strategists including Craig Nicol expect a net €15 billion ($15.9 billion) of fallen angels in 2024 as the “inexorable rise in interest costs as debt is refinanced will put incremental pressure on finances.”
Rising Star Boost
Rising star upgrades come with a clear set of benefits. S&P raised Ford’s rating to BBB- from BB+ on Monday, with a stable outlook. After this week’s move, Ford will be able to to borrow debt at lower rates and access deeper pools of capital, making it easier to fund operations.
The difference between yields on BBB rated debt — the lowest tier of investment grade — and BB rated debt, the highest-quality junk, is about 1.46 percentage points, according to data compiled by Bloomberg.
The upgrade will also yank Ford’s bonds out of fallen-angel and junk indexes. The carmaker accounts for almost a fifth of ICE BofA’s dollar-denominated fallen angel index, making it by far its largest component. It is also one of the largest pieces of the euro-denominated gauge, with a weight of more than 4%.
The fallen angels indexes will only reflect the change at the end of November due to rules on cutoff dates, according to a representative for the Intercontinental Exchange, Inc., which publishes the indexes.
And Ford is only the latest example. Occidental Petroleum Corp., which was another fallen angel in pandemic downgrade cycle, shed its junk status in May after an upgrade from Fitch. The promotion followed a similar move by Moody’s in March. Packaged-food maker Kraft Heinz Co. also climbed out of junk status after a second upgrade from junk.
Representatives for Ford, Occidental and Kraft didn’t respond to requests for comment.
“During this cycle — and coming from the pandemic — companies haven’t had time to lever up,” said Shanawaz Bhimji, head of corporate bond research at ABN Amro Bank NV. “We basically have a limited environment for fallen angels.”
(Updates with detail on Ford’s rating change in 12th paragraph. An earlier version corrected a reference to the rating move in chart note.)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
