A fallen angel is a bond that was rated as investment grade when issued, but has subsequently been rated as junk due to the deteriorating financial condition of its issuer. The bonds are downgraded to BB+ or below (junk) by at least two of the three major rating firms to be considered fallen angels.
Many fallen angels are from mature established firms that have fallen on hard times.
- What is a Fallen Angel?. Corporate Finance Institute.
- Why ‘Fallen Angels’ Are a Bond Market Preoccupation. Bloomberg.