Bangkok--13 Aug--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 241 basis points (bps), while its speculative-grade counterpart expanded slightly by 5 bps to 807 bps. By rating, spreads were mixed, with 'AA' and 'BBB' remaining at 155 bps and 319 bps, respectively, 'A' tightening one basis point to 206 bps, 'BB' expanding 6 bps to 529 bps, and 'B' and 'CCC' expanding 4 bps each to 757 bps and 1,318 bps, respectively.
Industry spreads remained largely unchanged, with financial institutions, industrials, and telecommunications remaining at Friday's levels of 460 bps, 424 bps, and 322 bps, respectively, and banks and telecommunications tightening one basis point each to 370 bps and 238 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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