Bangkok--21 Oct--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened marginally yesterday to 228 basis points (bps) and 706 bps, respectively. By rating, the 'AA' spread tightened one basis point to 153 bps, 'A' tightened 2 bps to 192 bps, 'BBB' tightened one basis point to 287 bps, 'BB' remained unchanged at 503 bps, 'B' tightened 3 bps to 681 bps, and 'CCC' remained unchanged at 1,108 bps.
By industry, financial institutions and industrials tightened 2 bps each to 383 bps and 371 bps, respectively. Banks, utilities, and telecommunications tightened one basis point each to 313 bps, 220 bps, and 326 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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