Bangkok--24 Aug--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 250 basis points (bps), while its speculative-grade counterpart widened marginally to 842 bps. By rating, the 'AA', 'A', and 'BBB' spreads remained unchanged at 165 bps, 212 bps, and 323 bps, respectively. The 'BB' spread widened 2 bps to 569 bps, 'B' remained unchanged at 803 bps, and 'CCC' tightened marginally by one basis point to 1,331 bps.
By industry, telecommunications expanded 2 bps to 353 bps, while utilities tightened by the same increment to 238 bps. Banks and industrials tightened one basis point each to 370 bps and 431 bps, respectively, and financial institutions remained unchanged at 457 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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