Bangkok--23 Jul--Standard & Poor's
Standard & Poor's investment-grade composite spread tightened by 3 basis points (bps) yesterday to 287 bps, while its speculative-grade counterpart widened marginally by one basis point to 958 bps. By rating, the 'AA' spread tightened one basis point to 187 bps, 'A' compressed 2 bps to 246 bps, 'BBB' tightened 4 bps to 379 bps, 'BB' tightened one basis point to 656 bps, 'B' compressed one basis point to 892 bps, and 'CCC' tightened 12 bps to 1,565 bps.
By industry, telecommunications tightened by the largest margin of 8 bps to 385 bps, followed by industrials and financial institutions, which tightened 5 bps each to 508 bps and 521 bps, respectively. Utilities and banks tightened marginally to 287 bps and 408 bps, respectively.
Despite material tightening since their all-time highs reached in December 2008, the speculative-grade spread remains near some of the highest levels ever recorded in a default cycle, and the investment-grade spread continues to face pressure from financial institutions and banks. In addition, speculative-grade defaults continue to accelerate, as does the preponderance of credit downgrades. Because of these factors, we expect spreads to remain at their elevated levels for some time as investors, the credit markets, and the economy cautiously tread through the current recessionary period.
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