Bangkok--29 Jan--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 186 basis points (bps), while its speculative-grade counterpart tightened 4 bps to 609 bps. By rating, the 'AA' spread tightened one basis point to 136 bps and 'A' and 'BBB' remained unchanged at 158 bps and 224 bps, respectively. The 'BB' spread tightened one basis point to 446 bps, 'B' expanded 6 bps to 623 bps, and 'CCC' expanded 14 bps to 955 bps.
By industry, financial institutions compressed 3 bps to 293 bps; industrials and telecommunications tightened one basis point each to 301 bps and 283 bps, respectively; and banks and utilities remained unchanged at 266 bps and 182 bps, respectively.
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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