In 2023, $134 billion worth of corporate bonds received a rating upgrade from BBB to A. This record pace represented an increase of more than 30% compared to 2019, the previous highest year at $103 billion. More specifically, this year's non-financials upgrades alone are over 50% more than the next highest year, 2021. 

 

This supports the idea that corporations have managed to cope well during this extended period of monetary policy tightening and provides hope that strong corporate balance sheets can be resilient in a potential economic slowdown. This is particularly important considering the elevated level of yields an investor can earn today for owning high-quality companies that could continue to see upgrades if an orderly slowdown were to occur alongside rate cuts in 2024.