LHA.DE - Deutsche Lufthansa AG

XETRA - XETRA Delayed price. Currency in EUR
8.75
+0.10 (+1.13%)
At close: 5:35PM CEST
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Previous close8.65
Open9.07
Bid8.73 x 948200
Ask8.74 x 1900800
Day's range8.57 - 9.40
52-week range7.81 - 22.70
Volume14,413,889
Avg. volume11,536,943
Market cap4.184B
Beta (5Y monthly)1.25
PE ratio (TTM)3.43
EPS (TTM)N/A
Earnings dateN/A
Forward dividend & yield0.80 (10.06%)
Ex-dividend date08 May 2019
1y target estN/A
  • Refunds row escalates as airlines warn millions of jobs at risk
    Reuters

    Refunds row escalates as airlines warn millions of jobs at risk

    Global airlines warned that 25 million jobs across the world could be at risk from the coronavirus air travel downturn, and held out against offering refunds to passengers as cash runs out. The International Air Transport Association (IATA) issued the warning as part of a series of messages about the state of airline industry, while urging governments to help. As it did so, Germanwings became the latest corporate casualty of the crisis as German parent Lufthansa announced its closure as part of a broader overhaul.

  • Lufthansa to discontinue Germanwings in sweeping restructuring
    Reuters

    Lufthansa to discontinue Germanwings in sweeping restructuring

    Lufthansa will close its Germanwings low-cost airline as part of a broader overhaul including capacity cuts across the group, it said on Tuesday as it warned it could take years for the industry to recover from the coronavirus crisis. The group, which also owns the Austrian Airlines, Swiss and Eurowings brands, said the coronavirus had forced it to accelerate radical restructuring steps. "Based on this evaluation, today the Executive Board has decided on extensive measures to reduce the capacity of flight operations and administration long term."

  • EasyJet jumps on £600m government loan and hopes of COVID-19 peak
    Yahoo Finance UK

    EasyJet jumps on £600m government loan and hopes of COVID-19 peak

    EasyJet's stock rose 25% on Tuesday as fears it could run out of cash eased.

  • Reuters

    Lufthansa to discuss permanently grounding Germanwings - sources

    Lufthansa will discuss permanently grounding its Germanwings low-cost airline unit at a management board meeting on Tuesday, two sources familiar with the matter told Reuters. It remains unclear whether a decision will be reached about closing down Germanwings, the sources said. A Lufthansa spokesman said no decisions had been taken and reiterated that all options were being considered as it reviews its business and ways to cut costs to mitigate the loss of business caused by the coronavirus crisis.

  • Lufthansa to discuss permanently grounding Germanwings: sources
    Reuters

    Lufthansa to discuss permanently grounding Germanwings: sources

    Lufthansa will discuss permanently grounding its Germanwings low-cost airline unit at a management board meeting on Tuesday, two sources familiar with the matter told Reuters. It remains unclear whether a decision will be reached about closing down Germanwings, the sources said. A Lufthansa spokesman said no decisions had been taken and reiterated that all options were being considered as it reviews its business and ways to cut costs to mitigate the loss of business caused by the coronavirus crisis.

  • Lufthansa working on capital raise plan to combat coronavirus pandemic -sources
    Reuters

    Lufthansa working on capital raise plan to combat coronavirus pandemic -sources

    Germany's Lufthansa is working on a package to raise money from the debt and equity markets to help see it through the coronavirus pandemic that has caused the collapse of passenger flights, two sources familiar with the matter said. The plan, which has yet to be finalised, could include a combination of convertible bonds, the sale of new shares and a rights issue, where existing shareholders buy additional shares in a company at a discount, the sources said, adding that it could happen within the next two weeks. Lufthansa declined to comment.

  • Lufthansa's Belgian carrier suspends flights until mid-May
    Reuters

    Lufthansa's Belgian carrier suspends flights until mid-May

    Belgium's Brussels Airlines, a Lufthansa subsidiary, has extended its suspension of flights until at least May 15, it said on Monday. The Belgian carrier had previously grounded flights until Apr. 19 but said it was extending that by four weeks because of "low to no demand", owing to travel restrictions aimed at curbing the spread of the coronavirus. Airlines have been among the hardest-hit industries as the spread of the COVID-19 respiratory disease trigerred by the new coronavirus has brought travel to a grinding halt in many parts of the world.

  • Bloomberg

    What I Learned From Trying to Cut My Own Hair

    (Bloomberg Opinion) -- Writing to shareholders this week, BlackRock Inc.s chief executive officer Larry Fink ruminated on how business and society will be reshaped by the searing experience of the new coronavirus:“People worldwide are fundamentally rethinking the way we work, shop, travel and gather. When we exit this crisis, the world will be different. Investors’ psychology will change. Business will change. Consumption will change. And we will be more deeply reliant on our families and each other to stay safe.”I had a similar epiphany this week while trying to cut my own hair — it turns out my regular $30 haircut isn’t as essential as I’d thought. Preparing a meal for my family later that evening made me think that eating out or getting dinner delivered isn’t as rewarding as home cooking. Right now the do-it-yourself version also feels a whole lot safer, and probably will do for a while.Compared to the courage shown by medical workers and those in other essential functions, and the devastation wrought by coronavirus on already vulnerable communities, many of us in the western world have it easy. We’re asked to do no more than stay home. But in between worrying about our jobs, our parents and how to entertain or home-school children, we’re reevaluating priorities. What will we do differently when this is over? What will we prize more and what will we give up? Once the immediate battle to protect employees and remain solvent has passed, the business world will have to confront these questions too. Two themes stand out: Instead of visiting far-flung places and seeking out mass entertainment, I’m sure there will be a bias toward more modest, local activities. And where the coronavirus has exposed dependency or vulnerability, as with the business world’s complex cross-border supply chains, we’ll seek more security and resilience.Looming above all of this is the damage that the lockdowns are inflicting on people’s incomes. The longer the economic shutdown lasts, the more reluctant the world’s consumers will be to spend, period. With more than 10 million Americans filing new unemployment claims in the past fortnight, the omens aren’t good.In the worst-affected sectors such as travel, hospitality and leisure, businesses are already facing a bleaker future. Increased consumer awareness about the negative environmental and social impact of mass tourism has now been compounded by the realization that people on planes and pleasure boats carried the virus around the globe. Lufthansa AG’s boss, Carsten Spohr, thinks the German airline will have to shrink because the economy will be smaller than before. Easyjet Plc’s founder, Stelios Haji-Ioannou, said similar this week when calling on the carrier to cancel a big order from Airbus SE.Even once travel restrictions are lifted, demand for cruises may remain weak for a “significant length of time,” Carnival Corp. warned. The beleaguered company had to offer bond-buyers an 11.5% interest rate to get them to back a $4 billion debt offering. That’s a bad sign.Fitness is another industry that relies on cramming people into confined spaces. Until recently it was booming but customers are discovering much cheaper ways to work out. Having sampled online classes and the time-saving benefit of exercising at, or close to, home, some memberships won’t be renewed. Good news for Peloton Interactive Inc.’s indoor cycling business, perhaps not for Planet Fitness Inc. or The Gym Group Plc. Until coronavirus came along, the tech world seemed hell-bent on taking agency away from individuals and consigning ownership to the dustbin. Why learn to cook when you can have food delivered in 30 minutes? Why own a car when you can take an Uber? Why look after your gadgets, when those nice people at Apple will fix them for you. But as my colleague Adam Minter pointed out this week, it’s only in a crisis that you discover the drawbacks of not being able to repair your own phone.There will be winners from this realignment too. Right now, auto sales are collapsing in Europe because you can’t go to a showroom and you’re not meant to drive far, but the freedom and security of owning a vehicle might cause sales to rebound more quickly than other discretionary purchases (provided of course that governments can curb unemployment). In China, emerging from the first virus wave, cautious consumers have begun returning to car dealers. Home improvement stores saw a brisk trade from customers wanting to fix up their homes, balconies and allotments whilst on lockdown, and some hardware stores remain open. Once the housing market reopens, urbanites may decide they’ve had enough of crowded cities and tiny apartments. The countryside is suddenly more appealing — the more so if employers become more trusting of those who want to work from home. Coronavirus has exposed our vulnerability and it won’t be the last crisis. Our planet-warming emissions mean more pain is preordained. Faced with uncertainty or disaster, humans respond by trying to strengthen their communities. We’ll also seek more control over our lives. For societies, that means equipping our health services, paying key workers properly and securing supplies. As individuals, it means out-sourcing fewer decisions and mastering things for ourselves. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Lufthansa reviewing future of Germanwings
    Reuters

    Lufthansa reviewing future of Germanwings

    Lufthansa is reviewing options for its Germanwings business after ruling out a union proposal to consider shortened work hours, also known as Kurzarbeit, as a stop-gap solution for helping the low-cost unit conserve cash. "There is no agreement on Kurzarbeit, the management board is reviewing options," a Lufthansa spokesman said in response to a question about whether Germanwings was slated for closure or whether shortened work hours would be implemented. Kurzarbeit is a policy tool in Germany which allows companies to slash wage bills by tapping an unemployment fund overseen by Germany's Federal Employment Office.

  • Exclusive: Germany in talks to inject billions into Lufthansa - sources
    Reuters

    Exclusive: Germany in talks to inject billions into Lufthansa - sources

    Germany is in talks to provide Lufthansa with billions of euros in state aid and could take a stake in the airline, which has grounded 95% of its fleet due to the coronavirus pandemic, people close to the matter said. The government and airline are discussing loans as well as a possible equity investment as Lufthansa grapples to cope with Berlin's order to all but halt its operations, the people said. "We are in close contact with the federal government to secure our liquidity", a Lufthansa spokesman said, but declined to comment on the details.

  • What to Watch: 'Tepid' rise in stocks, lay-offs grow, BA decision on staff
    Yahoo Finance UK

    What to Watch: 'Tepid' rise in stocks, lay-offs grow, BA decision on staff

    A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.

  • Coronavirus: Lufthansa to put 87,000 staff on part-time hours
    Yahoo Finance UK

    Coronavirus: Lufthansa to put 87,000 staff on part-time hours

    Europe's largest airline group has grounded over 90% of all flights.

  • Two-thirds of Lufthansa's staff to shorten work hours due to coronavirus
    Reuters

    Two-thirds of Lufthansa's staff to shorten work hours due to coronavirus

    Two-thirds of Lufthansa's global staff will work reduced hours after the German airline grounded much of its fleet due to the coronavirus pandemic, Lufthansa said on Wednesday. Lufthansa has applied or will apply for state aid to keep around 87,000 staff working on shorter hours, a spokesman said. The move was first reported by Business Insider.

  • Bloomberg

    Dubai Moves to Shield Prized Emirates Airline From Virus Fallout

    (Bloomberg) -- Over the course of more than three decades, Dubai has morphed from distant desert outpost into business metropolis, relying on state-owned airline Emirates to funnel many millions of travelers through the bustling hub each year. Now that the coronavirus has forced the carrier to suspend operations, the government is quickly swooping in to protect its most important growth engine.Dubai’s deputy ruler, Sheikh Hamdan bin Rashid Al Maktoum, said on Tuesday that the state will grant unspecified financial aid to Emirates, and that the government is committed to providing the full support by injecting fresh capital. It’s among the first state-sponsored bailouts of a carrier due to the coronavirus, which has upended the industry on an unprecedented scale.Emirates is the most visible emblem of Dubai’s transformation over the years, starting out with a pair of used aircraft in the mid-1980s to become an aviation force unmatched in global reach and boasting the biggest fleet of wide-body aircraft by far. Emirates has more than 100 Airbus SE A380s in operation alone, which rain down around the clock on Dubai International, the busiest airport by international traffic and a key transfer hub for global travel.Now Emirates, like most other airlines around the world, has been forced to ground virtually its entire passenger fleet after countries sealed off access to fight the virus. That has dramatically suffocated demand, which was already in decline as a depressed oil price weighed on corporate travel. Tourism from China also took a hit after the virus first erupted there late last year.“We don’t know how much demand is going to come back and when,” said John Strickland, an independent aviation consultant at JLS Consulting in London. “Emirates and other airlines will be carrying overcapacity for quite some time.”Airlines have been particularly hard hit by the abrupt collapse in air travel as countries lock down to slow the spread of the virus. The International Air Transport Association, which represents 290 airlines around the world, estimates the industry may suffer more than $250 billion in lost revenue this year. Carriers like Deutsche Lufthansa AG and EasyJet Plc have grounded their fleets, and many carriers have called on government aid to help them weather the crisis.Emirates is the largest of the major Middle East carriers, which also include Qatar Airways QCSC and Etihad Airways PJSC. Qatar said last week that it has maintained about a third of its operating schedule, in part because the country’s flag carrier has a more diverse fleet that also includes narrow-body airliners. Emirates, by contrast, only flies the biggest category of jets, including 115 A380s, which most carriers have mothballed for the time being.The three Middle East airlines are all state owned, giving them a potential advantage in swiftly securing bailout packages. In Europe, carriers from Air France-KLM Group to Lufthansa have asked for aid, while the massive U.S. stimulus package also includes support for the ailing industry. Airbus has said that while it doesn’t require state aid for now, it supports airlines’ efforts to secure government lifelines.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Factbox: Airlines ground flights, count mounting costs of the coronavirus shock
    Reuters

    Factbox: Airlines ground flights, count mounting costs of the coronavirus shock

    Air France-KLM said on March 16 it would park its biggest airliners and slash services by up to 90%. Air New Zealand said on March 16 it would cut long-haul capacity by 85% in the coming months and the domestic network by 30% in April and May. The airline has withdrawn its full-year outlook, frozen hiring and offered unpaid leave to staff.

  • A Sliding Share Price Has Us Looking At Deutsche Lufthansa AG's (ETR:LHA) P/E Ratio
    Simply Wall St.

    A Sliding Share Price Has Us Looking At Deutsche Lufthansa AG's (ETR:LHA) P/E Ratio

    Unfortunately for some shareholders, the Deutsche Lufthansa (ETR:LHA) share price has dived 31% in the last thirty...

  • European airlines resist mounting coronavirus refund claims
    Reuters

    European airlines resist mounting coronavirus refund claims

    European airlines waiting in line for coronavirus bailouts want to tap another source of interest-free loans: their customers. Cash-strapped carriers are seeking to suspend European Union rules requiring refunds for cancellations and instead issue vouchers to clients left out of pocket as hundreds of thousands of flights are grounded by the pandemic. Consumer organisations say some major airlines are already flouting the refund rules and condemn what they describe as an attempt to force consumers to lend them cash.

  • Lufthansa applies for short-time work for 31,000 employees
    Reuters

    Lufthansa applies for short-time work for 31,000 employees

    Lufthansa has applied for short-time work for around 31,000 crew and ground staff at its core brand until the end of August, a spokesman said on Friday, as Germany's flagship carrier has slashed flights due to the coronavirus outbreak. It has been widely used by industry, including Germany's car sector. The spokesman said Lufthansa had not yet applied for state aid but was in talks with various banks and authorities about what kind of help would be possible if the airline needed it.

  • The World's Airports Are Fast Becoming Ghost Towns
    Bloomberg

    The World's Airports Are Fast Becoming Ghost Towns

    (Bloomberg Opinion) -- Atlanta’s Hartsfield-Jackson International, the world’s busiest airport, has turned a runway into a parking lot for grounded aircraft; about 80% of Frankfurt airport workers have had their working hours cut and many now won’t go to work at all; Manchester has closed two of its three terminals and short-hop specialist London City Airport is suspending all flights until the end of April. Orly airport near Paris is also closing temporarily. The sudden collapse of air travel triggered by travel restrictions and customer fears of coronavirus is having a severe impact on airport cash flows. The fees they get from airlines have been cut to the bone, as have commercial revenues from services like car-parking. If retail concessions or car rental agents go bust, another source of income could be wiped out. European airport operators estimate that they face a 14 billion euro ($15 billion) hit to revenues.Like their airline customers, the world’s airports are calling on governments for financial assistance. Some help is justified — not least because airports play a vital role in transporting essential medical supplies. But for privatized airports, like those in the U.K., it could be more difficult to convince authorities that help is merited. International investors who’ve funded a massive expansion of global airport capacity in recent years may have to make sacrifices too. Where airports remain in public hands, as in the U.S., bailouts aren’t so controversial: airports are due to get a $10 billion handout as part of the government’s $2 trillion rescue plan. Without it, they worry they won’t be able to service a combined $100 billion debt load. A default would push up borrowing costs across the sector. The main Paris and Frankfurt airports, though part of listed groups, also have public anchor shareholders, which guarantees them a sympathetic ear should the need arise. French president Emmanuel Macron has wanted to sell down the state’s 50% shareholding in Aeroports de Paris but hasn’t made much progress.But in the U.K., taxpayer help for airports is more sensitive because much of the infrastructure is owned by international investors who’ve piled on debt and reaped large profits.Heathrow’s co-owners, which include Qatar Holding, the Government of Singapore Investment Corporation and China Investment Corporation, have lately collected about 500 million pounds ($592 million) annually in dividends. London Gatwick’s owner Global Infrastructure Partners pocketed a 640 million pound dividend before selling a majority stake to French infrastructure group Vinci SA for 2.9 billion pounds last year. GIP also sold the much smaller London City Airport to a Canadian-led consortium in 2016 for 2 billion pounds. Willie Walsh, the boss of British Airways owner International Consolidated Airlines Group SA, described the sky high price as “foolish”.  After its temporary closure this week, Walsh probably wouldn’t revise his opinion.       It’s no wonder the new U.K. finance minister Rishi Sunak is playing hardball. Writing to airlines and airports this week, Sunak told them to first try to raise money from shareholders or to seek flexibility from lenders before asking the public for help. Because of favorable regulation and the asset-heavy nature of the business, airports have been thought capable of supporting higher than average debt loads. Heathrow has 12.4 billion pounds of net debt, or 6.5 times ebitda (an imperfect measure of cash earnings).But it’s still a risky business. The danger that a global pandemic could sap future demand for air travel is clearly spelled out in airport loan documents. The financial health of airports is also intertwined with the airlines that use them most. British Airways contributes more than 40% of Heathrow’s airline-related income, while Lufthansa provides Frankfurt airport with about 60% of its passengers. Both are now grounding the bulk of their fleets.For now, U.K. airports have stopped short of asking for government cash or loans. Some  are better placed to cope than others. Heathrow says it has 3.3 billion pounds in liquidity, sufficient for at least a year of cash needs. In contrast, Gatwick held only about 15 million pounds of cash, plus a 300-million-pound undrawn loan facility, according to the most recent accounts. But its new majority owner Vinci has 14.5 billion pounds of cash and undrawn credit facilities.  Instead, U.K airports are calling for a reduction in regulatory and policing costs, relief from business taxes and that lenders be required to not enforce loan covenants temporarily. European peers are saying all aviation taxes should be suspended until the end of the year.This is controversial stuff. Until a few weeks ago, politicians in Europe were leaning toward making air travel more expensive to discourage planet-heating carbon emissions. Still, there are decent arguments for why airports, even those in the U.K., should be cut some slack. In recent weeks their workers have braved crowded terminals to get passengers home, risking contracting the coronavirus themselves. And when the virus is defeated, we’ll need airports around the world to help kick-start an export recovery.      After warning that its financial performance would be “significantly impacted,” Heathrow has announced a variety of steps to cut costs, including cancelling executive pay and delaying investments. But unlike Frankfurt airport operator Fraport AG, which is scrapping shareholder payouts, Heathrow has been oddly reticent about dividends. A clear statement that these payouts will now end might make Sunak more sympathetic to the industry’s plight. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Fallen Angels Are Coming and the Fed Can’t Save Them
    Bloomberg

    Fallen Angels Are Coming and the Fed Can’t Save Them

    (Bloomberg Opinion) -- Moody’s Investors Service wants to let corporate-bond investors know one thing in no uncertain terms: Ratings actions are coming. And soon.That is, if they haven’t already. The credit-rating company has already dropped dozens of companies in the past week, ever since it became clear that the double whammy of the coronavirus outbreak and the oil-price shock could decimate the outlook for certain industries. On March 17, it cut Lufthansa to Ba1, the highest speculative-grade rating, from Baa3, citing “a severe and extensive credit shock” from those two factors. One day later, Occidental Petroleum Corp. was similarly dropped to Ba1 from Baa3, making the crude oil and natural gas company the biggest “fallen angel” yet in this downgrade cycle. In a March 19 interview, Anne Van Praagh and Christina Padgett at Moody’s told me to expect to see more action in the next couple of weeks as analysts undertake a global review of ratings and go company by company through the sectors most at risk, like oil and gas, gambling, passenger airlines, restaurants and lodging.This, of course, is not what money managers or corporate leaders want to hear, particularly as it pertains to companies rated triple-B. A descent into junk can force at least some mutual funds to sell their holdings, potentially at steep losses, while making borrowing costs much more punitive for businesses at precisely the moment they need funds. It’s hard to believe, but just three months ago, the difference between double-B and triple-B corporate bond yields fell to 38 basis points, the smallest on record. It’s now almost 10 times that, at 345 basis points, the widest gap since 2011. JPMorgan Chase & Co. analysts wrote in note this week that fallen angels — companies that drop from investment grade to high yield — are likely to total $215 billion this year, topping 2005’s record of $100 billion. Barclays Plc sees fallen-angel volume of between $175 billion and $200 billion. As a percentage of the investment-grade market, JPMorgan’s estimate is for a 3.7% rate and Barclays’s is 3.5%. So far, $32 billion has dropped into speculative grade in 2020. One of the more interesting wrinkles in all of this is that the Federal Reserve on Monday announced measures designed to “support credit to large employers” — but only those with investment grades. Its Primary Market Corporate Credit Facility and Secondary Market Corporate Credit Facility can buy company bonds rated triple-B or higher with no more than four and five years until maturity, respectively. As my Bloomberg Opinion colleague Matt Levine noted, “the ratings agencies have a lot more power today than they had last week; now a downgrade can take a company out of eligibility for Fed support.”I have never worked at a credit-rating company, but I’m confident the analysts take no pleasure in this extreme negative shock to economic growth and the resulting deteriorating credit quality across industries. At the same time, their job is to objectively assess the outlook for companies. Whether it forces mutual-fund selling, more difficult borrowing conditions or even removes some debt from consideration by the Fed, none of that is in their immediate purview. “Our goal is really to inform market participants at this point where we see risks and where we see material changes to credit quality,” Van Praagh said. “This set of events and credit effects is unprecedented — we’ve never seen anything like this before.”That doesn’t mean people won’t try to plead for leniency. Levine suggested that perhaps the credit-rating firms should take a few months off. “I am not convinced that they can add a lot of value these days by telling investors that credit quality has declined — we know! — but they can certainly do some damage by causing forced sales.” Over in the municipal-bond market, Citigroup Inc. strategists suggested on March 17 that the companies should “cut municipal issuers some slack for now (think of it as patriotic duty)…. Let’s remember, we are all equally stunned, and equally blameless, where this crisis is concerned.”That’s just not how this works, though. The credit-rating companies will act as they see fit, even if it creates a wave of fallen angels. What could change, however, are mutual-fund requirements, which would allow funds that buy investment-grade securities to cling to fallen angels rather than offload them at fire-sale prices.To get a sense of how crucial the difference can be between double-B and triple-B, consider the following three exchange-traded funds: The VanEck Vectors Fallen Angel High Yield Bond ETF (ticker: ANGL); the iShares iBoxx Investment Grade Corporate Bond ETF (ticker: LQD); and the iShares iBoxx High Yield Corporate Bond ETF (ticker: HYG). From ANGL’s inception in April 2012 through the end of February, it gained 84.6% to LQD’s 50.2% and HYG’s 48.5%. Even after this month’s huge tumble, it’s still up 40% in the past eight years, compared with about 21% for both LQD and HYG.As Bloomberg Intelligence’s Eric Balchunas told me recently, this outperformance seems to prove that fallen angels drop in price more than their fundamentals would indicate. So even if all mutual-fund requirements aren’t as strict as we’re made to believe about selling downgraded bonds, there’s still enough rigidity out there for this strategy to profit. To be sure, ANGL has only existed up until now during boom times for credit markets, so it’s possible in a tougher environment it could face harsher losses, too.Still, this idea of arbitraging away potential mispricing between two credit ratings for easy profit makes sense intuitively. To me, at least, it would be better for a mutual-fund company to launch a dedicated strategy to picking winners among the incoming fallen angels rather than rewrite the rules at the last minute for its investment-grade funds. Or what about those unconstrained bond funds? A wave of downgrades and the messy trading that comes after are precisely the time that they’re supposed to back up the proverbial truck. Of course, it’s hard to do much of anything when confronted with an unprecedented stampede out of fixed-income funds.Dramatic Fed intervention may steady some markets, but unless something changes — and, judging by the last two weeks, it very well could — the central bank won’t be there to save fallen angels. Which brave investors will step up?This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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