Bangkok--7 Jun--Standard & Poor's
Standard & Poor's investment- and speculative-grade composite spreads compressed marginally yesterday to 198 basis points (bps) and 658 bps, respectively. By rating, the 'AA' and 'A' spreads tightened one basis point each to 138 bps and 174 bps, respectively, and 'BBB' remained flat at 239 bps. The 'BB' spread tightened 3 bps to 492 bps, 'B' compressed 5 bps to 693 bps, and 'CCC' tightened 4 bps to 940 bps.
By industry, telecommunications tightened by the largest increment of 3 bps to 318 bps, followed by banks, which tightened 2 bps to 283 bps. Industrials compressed one basis point to 326 bps, while financial institutions expanded by the same margin to 297 bps. Utilities remained unchanged at 201 bps.
After Standard & Poor's investment-grade and speculative-grade composite spreads reached two-year lows at the end of April of 156 bps and 553 bps, respectively, spreads have widened considerably. The speculative-grade composite spread is currently 16% wider than its five-year moving average of 570 bps, and its investment-grade counterpart has widened 1% from its five-year moving average of 197 bps. We expect continued volatility in the near term, especially in the speculative-grade segment, which could result from both positive and negative factors. On the positive side, economic growth in the U.S. likely will continue to support stabilization of credit quality. On the negative side, an increase in volatility in the financial markets, influenced partially by European debt problems, could continue to weigh on risky assets.
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