Bangkok--7 Sep--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened marginally yesterday to 244 basis points (bps) and 837 bps, respectively. By rating, the 'AA' spread expanded one basis point to 163 bps, and 'A' and 'BBB' tightened by the same increment to 204 bps and 313 bps, respectively. The 'BB' spread tightened 4 bps to 568 bps, and 'B' and 'CCC' tightened 3 bps each to 800 bps and 1,321 bps, respectively.
By industry, financial institutions, banks, industrials, and telecommunications tightened one basis point each to 439 bps, 361 bps, 422 bps, and 348 bps, respectively, while utilities remained unchanged at 231 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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