SPDR S&P 500 (SPY)

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About $640 billion in bonds are rated Baa3, one hair above junk, up from $295 billion in Q3 2007, just before the Financial Crisis. A one-notch downgrade of the issuing company would put them into junk territory. This would be the "fallen-angel downgrade." Moody's points out that on average over the span of a year - and these have been the good times - 10% of Baa3-rated companies are downgraded into junk . And there are consequences:

In view of how most companies wish to avoid a fallen-angel downgrade, and given the age of the current business cycle upturn, companies having a Baa3 bond rating might opt for relatively conservative financial management. Such companies might be expected to proceed cautiously with capital spending, employee compensation, acquisitions, stock buybacks, and dividends.

This is one of the ways in which debt and credit ratings can impact the stock market: via scuttled share buybacks and dividend, long before the viability of the company is seriously in doubt.

This is one of the biggest such deals ever, happening now: A group of PE firms extracts $3.75 billion from a company after they'd already extracted billions