Yet, the essential message to both firms and a likely consequence of the rating—the risk of falling out of well-managed status—is identical. To me, this outcome makes no sense. Why should the firm that is objectively weaker face the same consequences as the firm that is objectively stronger?
The flight to quality is a predictable consequence of current financial conditions: the fragility of some countries and banks, combined with the heightened uncertainty regarding the future. Investors react by trying to move funds from more indebted countries to “safe havens”.