Bangkok--18 Mar--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged yesterday at 180 basis points (bps), while its speculative-grade counterpart expanded 6 bps to 608 bps. By rating, the 'AA' and 'A' spreads remained unchanged at 127 bps and 158 bps, respectively, and 'BBB' expanded one basis point to 215 bps. The 'BB' spread widened 4 bps to 436 bps and 'B' and 'CCC' expanded 7 bps each to 627 bps and 927 bps, respectively.
By industry, industrials and telecommunications widened by the largest margin of 2 bps each to 310 bps and 290 bps, respectively. Utilities followed, expanding by one basis point to 182 bps. Banks tightened one basis point to 252 bps and financial institutions remained unchanged at 281 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
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_
[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]