Bangkok--12 Oct--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened yesterday to 235 basis points (bps) and 740 bps, respectively. By rating, the 'AA' spread tightened 2 bps to 159 bps, 'A' remained unchanged at 197 bps, 'BBB' tightened one basis point to 295 bps, 'BB' compressed 7 bps to 521 bps, 'B' tightened 10 bps to 709 bps, and 'CCC' compressed 9 bps to 1,153 bps.
By industry, spreads were mostly tighter, with banks, industrials, utilities, and telecommunications tightening marginally to 322 bps, 384 bps, 224 bps, and 334 bps, respectively. Financial institutions remained unchanged at 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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