KBRA Analytics Releases Research ? Credit Implications of Higher for Longer

BY Business Wire | ECONOMIC | 05/18/23 03:06 PM EDT

NEW YORK--(BUSINESS WIRE)-- KBRA Analytics examines how the correction of the economy and markets following the massive distortions introduced by the COVID-19 pandemic is likely to affect the corporate credit landscape.

As the Federal Reserve continues to address high inflation, its money tightening policies are driving the cost of capital back above its longer-term average. Draining liquidity out of the system will raise the bar for acceptable returns which, in turn, should unleash capitalism?s creative destruction, something that has been dormant through much of the ultra-low interest rate period.

In this new paradigm, cash flow resiliency will be tested against not only higher rates, but also slower growth, technological disruption, higher costs associated with the energy transition, as well as increased geopolitical uncertainty.

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About KBRA Analytics

KBRA Analytics, LLC (KBRA Analytics) is our premier product platform for high quality data and advanced analytics. Our seasoned teams of industry specialists across each product provide unparalleled insight creating a foundation of deeper analysis and rapid discovery for users. KBRA Analytics is an affiliate of Kroll Bond Rating Agency, LLC (KBRA). KBRA is a full-service credit rating agency registered in the U.S., designated to provide structured finance ratings in Canada, and with credit rating affiliates registered in the EU and UK.

Source: KBRA Analytics, LLC

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.