Bangkok--15 Jan--Standard & Poor's
Standard & Poor's investment-grade spread remained unchanged yesterday at 182 basis points (bps), while its speculative-grade counterpart tightened to 579 bps. By rating, the 'AA' spread remained unchanged at 129 bps; 'A' and 'BBB' tightened one basis point each to 156 bps and 223 bps, respectively; 'BB' tightened 6 bps to 424 bps; 'B' tightened 7 bps to 584 bps; and 'CCC' tightened 16 bps to 903 bps.
Industry spreads tightened marginally for four out of five industries. Financial institutions, industrials, and telecommunications tightened by the largest increment of 2 bps each to 304 bps, 293 bps, and 266 bps, respectively. Banks tightened one basis point to 259 bps and utilities remained unchanged at 183 bps.
Since their record highs in December 2008, the investment-grade and speculative-grade spreads have tightened in the range of their five-year moving averages of 197 bps and 570 bps, respectively. This is partially attributable to a rough 18% increase in both the moving averages since the beginning of 2009. But, it also reflects a recent optimistic sentiment in the credit markets--particularly the expectations for downgrades and corporate defaults to wane from their current near-record highs and an apparent stabilization in credit quality. We expect credit spreads to compress further, especially for nonfinancials, as the decoupling of systemic to idiosyncratic risk continues to normalize credit pricing. However, financials might remain volatile because of uncertainty regarding loan losses and some banks' ability to raise capital without government support.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
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Analyst Contact:
Diane Vazza, New York (1) 212-438-2760
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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Americas Customer Service: (1) 212-438-7280
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