Bangkok--10 Nov--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened on Friday to 223 basis points (bps) and 703 bps, respectively. By rating, the investment-grade spreads compressed an average of 7 bps, with 'AA' tightening to 149 bps, 'A' to 188 bps, and 'BBB' to 279 bps. In the speculative-grade domain, the 'BB' and 'B' spreads compressed 9 bps each to 505 bps and 684 bps, respectively, while 'CCC' compressed 27 bps to 1,105 bps.
Industry spreads compressed across the board as well, with industrials tightening by the largest increment of 11 bps to 362 bps. Financial institutions followed, tightening 9 bps to 382 bps, trailed by banks, which tightened 8 bps to 300 bps. Utilities compressed 7 bps to 216 bps and telecommunications compressed 6 bps to 334 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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Mimi Barker, New York (1) 212-438-5054,
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