Bangkok--1 Apr--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened one basis point each yesterday, to 173 basis points (bps) and 573 bps, respectively. By rating, the 'AA' spread tightened one basis point to 120 bps. The 'A', 'BBB', 'BB', and 'B' spreads remained unchanged at 152 bps, 207 bps, 412 bps, and 597 bps, respectively. The 'CCC' spread tightened 4 bps to 873 bps.
Industry spreads were largely unchanged as well, with financial institutions, banks, industrials, and utilities remaining at Friday's levels of 269 bps, 237 bps, 298 bps, and 177 bps, respectively. Telecommunications tightened one basis point to 277 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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