Bangkok--1 Feb--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads remained unchanged yesterday at 186 basis points (bps) and 609 bps, respectively. By rating, the 'AA' and 'A' spreads widened one basis point each to 137 bps and 159 bps, respectively; 'BBB' remained unchanged at 224 bps; 'BB' and 'B' expanded one basis point each to 447 bps and 624 bps, respectively; and 'CCC' remained unchanged at 955 bps.
Industry spreads were largely unchanged, with financial institutions, industrials, utilities, and telecommunications remaining at 293 bps, 301 bps, 181 bps, and 283 bps, respectively. Banks widened marginally by one basis point to 267 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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