Bangkok--22 Oct--Standard & Poor's
Standard & Poor's investment-grade composite spread tightened one basis point yesterday to 227 basis points (bps), while its speculative-grade counterpart expanded by the same margin to 707 bps. By rating, the investment-grade spreads tightened by an average of 2 bps, leaving 'AA' at 150 bps, 'A' at 191 bps, and 'BBB' at 286 bps. The speculative-grade spreads by rating were mixed, with 'BB' and 'B' expanding 3 bps each to 506 bps and 684 bps, respectively, and 'CCC' tightening 2 bps to 1,106 bps.
Industry spreads were also mixed, with banks tightening 2 bps to 312 bps; industrials and utilities tightening one basis point each to 370 bps and 219 bps, respectively; financial institutions remaining unchanged at 382 bps; and telecommunications widening one basis point to 327 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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