Importance of Credit Analysis in Managing FI Portfolios

As a fixed income portfolio manager, one of your responsibilities is to assess the credit quality of bonds in your portfolio. Consider a scenario where you have invested in a corporate bond issued by Company X, which has a credit rating of BBB. The company has recently experienced a decline in its revenue due to changes in market conditions.

In this context, discuss the importance of credit analysis in managing fixed income portfolios. In your response, include key factors that can influence the decision to hold or sell the bond and how you would assess the potential credit risk associated with Company X.