Bangkok--16 Dec--Standard & Poor's
Standard & Poor's speculative-grade and investment-grade composite spreads compressed on Tuesday following a jump in 10-year Treasury rates. The investment-grade and speculative-grade composite spreads tightened to 182 basis points (bps) and 542 bps, respectively. Spreads tightened by larger increments progressively down the ratings scale. By rating, the 'AA' and 'A' spreads compressed one basis point each to 122 bps and 158 bps, respectively, and the 'BBB' spread contracted 2 bps to 221 bps. The 'BB' spread compressed 11 bps to 394 bps, 'B' tightened 15 bps to 557 bps, and 'CCC' compressed 17 bps to 841 bps.
By industry, financial institutions and industrials contracted 3 bps each to 283 bps and 272 bps, respectively. Banks and telecommunications tightened 2 bps each to 256 bps and 283 bps, respectively, and utilities compressed by one basis point to 188 bps.
After Standard & Poor's investment-grade and speculative-grade composite spreads reached two-year lows at the end of April of 159 bps and 537 bps, respectively, spreads widened to peaks of 210 bps and 685 bps, respectively, in July. The speculative-grade spread has gradually tightened since and is now down within the range we saw in April. The investment-grade spread also has gradually tightened since July, and over the past month, it has remained within the range we saw at the beginning of the year. We expect continued volatility in the near term, especially in the speculative-grade segment, which could result from both positive and negative factors. On the positive side, economic growth in the U.S. likely will continue to support stabilization of credit quality. On the negative side, an increase in volatility in the financial markets, influenced partially by European debt concerns, could continue to weigh on risky assets.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
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Analyst Contact:
Diane Vazza, New York (1) 212-438-2760