Bangkok--16 Apr--Standard & Poor's
Standard & Poor's investment-grade composite spread remained unchanged on Friday at 170 basis points (bps), while its speculative-grade counterpart tightened marginally to 561 bps. By rating, the 'AA' and 'A' spreads remained unchanged at 117 bps and 147 bps, respectively, and 'BBB' tightened one basis point to 202 bps. The 'BB' and 'B' spreads compressed 2 bps each to 406 bps and 584 bps, respectively, and 'CCC' tightened 7 bps to 839 bps.
Industry spreads compressed marginally, with financial institutions, industrials, and telecommunications tightening 2 bps each to 255 bps, 292 bps, and 274 bps, respectively. Banks and utilities tightened one basis point each to 228 bps and 173 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]
Standard & Poor's,