Bangkok--9 Oct--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 236 basis points (bps), and its speculative-grade counterpart expanded one basis point to 749 bps. By rating, the 'AA' spread expanded 2 bps to 161 bps; 'A' remained unchanged at 197 bps; 'BBB' expanded one basis point to 296 bps; 'BB' and 'B' expanded 3 bps each to 528 bps and 719 bps, respectively; and 'CCC' expanded 5 bps to 1162 bps.
Spreads were largely unchanged across industries. Banks, industrials, utilities, and telecommunications remained at 323 bps, 386 bps, 224 bps, and 335 bps, respectively. Financial institutions tightened 2 bps to 392 bps.
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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