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FHY - Falling Too Far? What Sets Fallen Angels Apart
First Trust Strategic High Income Fund II of Beneficial Interest
By Robin Marshall, director, fixed income research at FTSE Russell
When US investment-grade bonds are downgraded and cross the ratings threshold into high yield territory, they join the sector known as "fallen angels." And while they're technically categorized as high yield ((HY)) bonds, it's important to note that fallen angels were initially issued as investment-grade ((IG)) credits. This is why they tend to have distinct characteristics that set them apart from the rest of the US HY bond market.
A fallen angel ((FA)) is a corporate or sovereign bond downgraded from IG - a minimum