Bangkok--19 Feb--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened yesterday to 194 basis points (bps) and 659 bps, respectively. By rating, the 'AA' spread tightened one basis point to 140 bps, 'A' remained unchanged at 169 bps, 'BBB' compressed one basis point to 230 bps, 'BB' tightened 9 bps to 476 bps, 'B' compressed 16 bps to 676 bps, and 'CCC' tightened 17 bps to 1,015 bps.
By industry, telecommunications tightened the most, by a margin of 6 bps to 314 bps. Industrials followed, compressing 4 bps to 337 bps, followed by banks, which tightened 2 bps to 273 bps, and utilities, which compressed one basis point to 190 bps. Financial institutions remained unchanged at 305 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,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_
[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]