Bangkok--15 Sep--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged at 239 basis points (bps) on Friday, while its speculative-grade counterpart tightened 10 bps to 813 bps. By rating, the 'AA' and 'A' spreads remained unchanged at 160 bps and 200 bps, respectively; 'BBB' tightened one basis point to 307 bps; 'BB' tightened 5 bps to 556 bps; 'B' tightened 9 bps to 780 bps; and 'CCC' tightened 29 bps to 1,267 bps.
By industry, industrials tightened by the largest increment, compressing 3 bps to 411 bps. Banks and telecommunications followed, tightening 2 bps each to 349 bps and 336 bps, respectively. Financial institutions tightened one basis point to 429 bps and utilities remained unchanged at 229 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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