Bangkok--18 Feb--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 195 basis points (bps), while its speculative-grade counterpart widened 4 bps to 674 bps. By rating, the 'AA', 'A', and 'BBB' spreads remained unchanged at 141 bps, 169 bps, and 231 bps, respectively. The 'BB' spread expanded one basis point to 485 bps, 'B' expanded 5 bps to 692 bps, and 'CCC' remained unchanged at 1,032 bps.
Most of the industry spreads were wider, with financial institutions, banks, industrials, and telecommunications expanding one basis point each to 305 bps, 275 bps, 341 bps, and 320 bps, respectively. Utilities remained unchanged at 191 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:
Ana Sandoval, New York (1) 212-438-5095,
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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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