Financial media and investors have been focusing on the BBB segment of the U.S. investment grade ((IG)) corporate bond market this year. At $3.1 trillion in market capitalization (nearly quadrupled from a decade ago), BBBs constitute nearly half of the investment grade corporate universe, according to the ICE BAML U.S. Corporate BBB and U.S. Corporate Master indices.
There are generally two concerns around BBBs: 1) refinancing risk as interest rates rise and 2) downgrade risk into the high yield or "junk" bond universe, especially for the lower rated or BBB- portion of the BBB cohort.