Bangkok--11 Mar--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 184 basis points (bps), while its speculative-grade counterpart tightened to 613 bps. By rating, the 'AA' spread remained unchanged at 133 bps, 'A' compressed one basis point to 161 bps, and 'BBB' remained unchanged at 219 bps. The 'BB' spread tightened 3 bps to 441 bps and 'B' and 'CCC' compressed 2 bps each to 632 bps and 940 bps, respectively.
By industry, telecommunications tightened 2 bps to 291 bps and financial institutions, industrials, and utilities tightened one basis point each to 289 bps, 316 bps, and 184 bps, respectively. Banks remained unchanged at 262 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