Bangkok--29 Jul--Standard & Poor's
Standard & Poor's investment-grade and speculative-grade composite spreads tightened yesterday to 196 basis points (bps) and 623 bps, respectively. By rating, the 'AA' spread tightened one basis point to 133 bps, 'A' compressed 2 bps to 168 bps, and 'BBB' tightened 3 bps to 241 bps. The 'BB' spread tightened 6 bps to 462 bps, 'B' compressed 11 bps to 654 bps, and 'CCC' tightened 13 bps to 930 bps.
By industry, telecommunications compressed the most, by 7 bps to 303 bps, followed by banks and industrials, which tightened 4 bps each to 264 bps and 305 bps, respectively. Financial institutions compressed 2 bps to 300 bps, and utilities tightened one basis point to 303 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.
Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, and data. With approximately 10,000 employees, including wholly owned affiliates, located in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.
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