Why corporate bonds may be ‘fairly guarded’ from Moody’s downgrade of U.S. debt

Market Extra

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Published: May 19, 2025 at 8:20 p.m. ET

Moody’s decision to lower the rating on U.S. government debt seems unlikely to shake up the corporate bond market too much.

The downgrade may make “a little bit of noise,” with long-term Treasurys appearing more sensitive to concerns about U.S. fiscal deterioration, said Luis Alvarado, global fixed-income strategist at Wells Fargo Investment Institute, in a phone interview Monday. But while “knee-jerk” reactions pushed Treasury yields higher, corporate credit should be “fairly guarded” from Moody’s stripping the U.S. of its triple-A rating, he said, partly because companies’ balance sheets generally appear to be in good shape.