Bangkok--16 Oct--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened yesterday to 233 basis points (bps) and 721 bps, respectively. By rating, the investment-grade spreads tightened an average of slightly more than one basis point, with 'AA' compressing to 157 bps, 'A' to 196 bps, and 'BBB' to 292 bps. The speculative-grade spreads tightened by just over 10 bps, with 'BB' compressing to 507 bps, 'B' to 695 bps, and 'CCC' to 1,127 bps.
By industry, banks and industrials tightened by the largest increment of 3 bps each to 317 bps and 379 bps, respectively. Telecommunications followed, tightening 2 bps to 329 bps. Financial institutions tightened one basis point to 392 bps and utilities remained unchanged at 223 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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