Bangkok--3 Mar--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 190 basis points (bps), while its speculative-grade counterpart tightened 4 bps to 645 bps. By rating, the 'AA' spread compressed one basis point to 136 bps and 'A' and 'BBB' remained unchanged at 165 bps and 226 bps, respectively. The 'BB' spread tightened one basis point to 467 bps, 'B' compressed 6 bps to 664 bps, and 'CCC' tightened 11 bps to 988 bps.
By industry, banks and telecommunications tightened one basis point each to 268 bps and 304 bps, respectively, and financial institutions, industrials, and utilities remained unchanged at 298 bps, 329 bps, and 188 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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