Bangkok--9 Mar--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened on Friday to 185 basis points (bps) and 623 bps, respectively. By rating, the 'AA' and 'A' spreads compressed one basis point each to 134 bps and 163 bps, respectively; 'BBB' tightened 3 bps to 220 bps; 'BB' compressed 9 bps to 450 bps; 'B' tightened 12 bps to 642 bps; and 'CCC' tightened 14 bps to 956 bps.
By industry, industrials and telecommunications tightened the most, compressing by 4 bps each to 321 bps and 295 bps, respectively. Financial institutions, banks, and utilities followed, tightening 2 bps each to 293 bps, 262 bps, and 185 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