BlackRock: "Making the grade: How risky are BBB bonds?"

Let's put it this way, the phrases "...sucked into the self-referential vortex of psychologically important thresholds" (FT Alphaville) and "Nightmare World of Dream Demons and Market Depravity" (moi) come to mind.
Also doom loops and strange loops.
Here's a graphic example of a strange loop:

Drawing Hands M.C. Escher, 1948

And maybe throw in Keynes' Euthanasia of the rentier while we're at it, although in this case the euthanasia is more of an assisted suicide accomplished by downgrades and defaults rather than the General Theory's zero interest rates.
Where was I?

From BlackRock's blog, October 7:

Economic uncertainty has increased investor focus on the possibility of BBB-rated bonds being downgraded to junk. Investors should weigh this risk with their search for yield.

Over the past several months, I have been fielding more questions about the state of the BBB-rated bond market. (BBB is the lowest tier of investment grade.)  As this credit cycle has lengthened, investors are concerned about the potential for a large amount of bonds being downgraded to junk, a status known as “fallen angels.” In this post, I’ll assess the risks of this growing market and how they can position for a potential downturn.

Growth of the BBB bond market
Over the past decade, the investment-grade corporate bond market has grown as issuers have taken advantage of rock-bottom interest rates and increased demand from yield-starved investors. Today, the BBB-rated segment now makes up over 50% of the investment grade market versus only 17% in 2001. Over the past decade, U.S.-related BBB corporate debt has grown 2.2x to $2.5 trillion, representing $1.2 trillion of net new issuance and $745 billion of downgrades from a higher credit quality.²

Credit spreads, or the additional yield investors receive above Treasury bonds, have not widened, even as more debt has been issued. (Widening spreads point to increased risk expectations.) This is due to a number of global factors. In the U.S., after years of near-zero interest rates, investors are searching for yield, making them look at lower-quality investment grade securities like BBB bonds. At the same time, foreign investors have been drawn to U.S. corporate bonds, which continue to see solidly positive yields, as other developed markets are seeing negative bond yields....

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