Bangkok--24 Oct--Standard & Poor's
The hair-raising events that began in September have cast a pall that extends beyond the financial markets, and the impact is increasingly being felt in asset segments that historically have been relatively uncorrelated, said an article published today by Standard & Poor's.
Commodities--seen as a bright light in the investing firmament in the first half of this year--were among those afflicted late in the third quarter, and they continue to be in October, according to the article, titled "Credit Gloom Envelops Commodities."
The risk of fallout is rising as fear about a global recession intensifies and concern about demand grows. At the same time, additional reverberations are emanating from factors unrelated to the fundamentals of supply and demand.
"A significant expansion in the investor base combined with product innovations liquefied the commodity markets in recent years, a development that can be expected to yield rich material rewards for diversified investors in the long term," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "However, this does little to mitigate the near-term risk that commodities too will feel the burden of risk withdrawal as liquidity retreats worldwide."
Rating trends have already begun to turn from their previously bullish levels (though downgrades are still lower than upgrades), and the likelihood is high that deterioration will continue in the near term.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760