Bangkok--26 Feb--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 190 basis points (bps), while its speculative-grade counterpart tightened one basis point to 638 bps. By rating, the 'AA' spread remained unchanged at 136 bps, 'A' expanded one basis point to 165 bps, 'BBB' remained unchanged at 226 bps, 'BB' tightened 2 bps to 460 bps, 'B' remained unchanged at 657 bps, and 'CCC' compressed one basis point to 982 bps.
By industry, banks and telecommunications expanded one basis point each to 267 bps and 303 bps, respectively. Financial institutions, industrials, and utilities were unchanged at 298 bps, 328 bps, and 187 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,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760