Bangkok--8 Mar--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened marginally yesterday to 188 basis points (bps) and 634 bps, respectively. By rating, the 'AA', 'A', and 'BBB' spreads compressed one basis point each to 135 bps, 164 bps, and 223 bps, respectively. The 'BB' and 'B' spreads tightened 3 bps each to 459 bps and 654 bps, respectively, and 'CCC' compressed 4 bps to 970 bps.
By industry, financial institutions tightened by the largest increment of 3 bps to 294 bps. Banks, industrials, and telecommunications followed, compressing 2 bps each to 265 bps, 325 bps, and 299 bps, respectively. Utilities tightened one basis point to 187 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,
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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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