Bangkok--6 Oct--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads continued expanding on Friday, to 238 basis points (bps) and 753 bps, respectively. This comes after they reached their lowest levels in more than a year this past week (at 230 bps and 735 bps, respectively). By rating, spreads expanded across the board, with 'AA', 'A', and 'BBB' widening one basis point each to 161 bps, 199 bps, and 297 bps, respectively. The 'BB' spread expanded 3 bps to 528 bps, 'B' expanded 2 bps to 723 bps, and 'CCC' widened 12 bps to 1,162 bps.
Spreads widened across the board by industry as well, with industrials and telecommunications expanding by the largest margin of 3 bps to 388 bps and 338 bps, respectively. Financial institutions, banks, and utilities widened one basis point each to 396 bps, 328 bps, and 224 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.
Media Contact:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760