Bangkok--27 Jul--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade spreads tightened yesterday, to 282 basis points (bps) and 916 bps, respectively. By rating, spreads tightened across the board, with 'AA' tightening 2 bps to 185 bps, 'A' tightening 3 bps to 241 bps, 'BBB' tightening 5 bps to 373 bps, 'BB' tightening 21 bps to 623 bps, 'B' tightening 24 bps to 853 bps, and 'CCC' tightening 47 bps to 1,497 bps.
By industry, industrials tightened the most, compressing 10 bps to 494 bps, followed by telecommunications, which tightened 7 bps to 371 bps. Banks and utilities were tied for third, tightening 4 bps each to 406 bps and 282 bps, respectively, followed by financial institutions, which tightened 2 bps to 516 bps.
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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