Bangkok--5 Apr--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened marginally yesterday to 172 basis points (bps) and 572 bps, respectively. By rating, the 'AA' spread tightened one basis point to 119 bps, 'A' remained unchanged at 151 bps, and 'BBB' compressed one basis point to 205 bps. The 'BB' and 'B' spreads tightened 2 bps each to 413 bps and 597 bps, respectively, and 'CCC' compressed 10 bps to 860 bps.
By industry, banks and industrials tightened by the largest increment of 2 bps each to 234 bps and 297 bps, respectively. Financial institutions, utilities, and telecommunications compressed one basis point each to 265 bps, 175 bps, and 277 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
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_
[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]