Bangkok--11 Feb--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads expanded yesterday to 194 basis points (bps) and 654 bps, respectively. By rating, the 'AA', 'A', and 'BBB' spreads widened one basis point each to 139 bps, 167 bps, and 230 bps, respectively. The 'BB' spread expanded 2 bps to 472 bps, 'B' widened 5 bps to 672 bps, and 'CCC' expanded 8 bps to 1,010 bps.
By industry, banks and industrials expanded by the largest increment of 2 bps each to 267 bps and 334 bps, respectively, while financial institutions, utilities, and telecommunications expanded one basis point each to 301 bps, 190 bps, and 312 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:
Jeff Sexton, New York (1) 212-438-3448,
[email protected]
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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