Bangkok--15 Feb--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 194 basis points (bps), while its speculative-grade counterpart expanded 5 bps to 663 bps. By rating, the 'AA' and 'A' spreads widened one basis point each to 140 bps and 168 bps, respectively, and 'BBB' remained unchanged at 230 bps. The 'BB' spread expanded 2 bps to 477 bps, and 'B' and 'CCC' widened 4 bps each to 679 bps and 1,024 bps, respectively.
Industry spreads expanded marginally across the board, with banks and industrials widening by the largest margin of 2 bps each to 272 bps and 337 bps, respectively. Financial institutions, utilities, and telecommunications widened one basis point each to 302 bps, 191 bps, and 316 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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