Bangkok--12 Mar--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened yesterday to 183 basis points (bps) and 608 bps, respectively. By rating, the 'AA', 'A', and 'BBB' spreads compressed one basis point each to 132 bps, 160 bps, and 218 bps, respectively. The 'BB' spread tightened 5 bps to 436 bps, 'B' compressed 6 bps to 626 bps, and 'CCC' tightened 9 bps to 931 bps.
By industry, industrials tightened by the largest margin of 3 bps to 314 bps, followed by financial institutions and banks, which compressed 2 bps each to 287 bps and 260 bps, respectively. Utilities and telecommunications tightened one basis point each to 183 bps and 290 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