Bangkok--28 Sep--Standard & Poor's
Standard & Poor's speculative-grade composite spread tightened 4 basis points (bps) yesterday to 735 bps, while its investment-grade counterpart remained unchanged at 231 bps. By rating, the 'AA' spread widened 2 bps to 156 bps; 'A' widened one basis point to 193 bps; 'BBB' and 'BB' remained unchanged at 294 bps and 514 bps, respectively; 'B' tightened 3 bps to 706 bps; and 'CCC' expanded marginally to 1,122 bps.
Industry spreads were mixed, with industrials tightening 2 bps to 380 bps; financial institutions and utilities tightening one basis point each to 397 bps and 220 bps, respectively; and banks and telecommunications expanding 2 bps each to 320 bps and 328 bps, respectively.
Despite material tightening since their record highs in December 2008, the speculative-grade spread remains range-bound within 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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