Bangkok--20 Jan--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads expanded slightly on Friday to 182 basis points (bps) and 586 bps, respectively. By rating, the 'AA' and 'A' spreads remained unchanged at 129 bps and 154 bps, respectively; 'BBB' tightened one basis point to 222 bps; 'BB' expanded 4 bps to 432 bps; 'B' widened 3 bps to 592 bps; and 'CCC' tightened 4 bps to 901 bps.
Spreads were mixed by industry, with financial institutions and utilities tightening marginally to 296 bps and 181 bps, respectively, and banks and utilities remaining at Thursday's levels of 258 bps and 292 bps, respectively. Telecommunications expanded 2 bps to 270 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
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Americas Media Relations: (1) 212-438-6667
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