TEXT-S&P speculative-grade composite spread remains flat at 651 bps

Apr 13 - Standard & Poor's investment-grade composite spread widened by 2 basis points (bps) to 205 bps yesterday, and the speculative-grade composite spread remained unchanged at 651 bps. By rating, the 'AA' and 'A' spreads widened by 2 bps each to 135 bps and 177 bps, respectively, and 'BBB' widened by 3 bps to 252 bps. The 'BB' spread narrowed by 1 bp to 468 bps, 'B' remained flat at 701 bps, and 'CCC' widened by 3 bps to 1,075 bps.

By industry, financial institutions and utilities expanded by 3 bps each to 313 bps and 209 bps, respectively. Banks and industrials expanded by 2 bps each to 322 bps and 302 bps, respectively. Telecommunications expanded by 4 bps to 336 bps.

The investment-grade and speculative-grade spreads are both down from their highs reached in October. The investment-grade spread is above its one-year moving average of 199 bps and below its five-year moving average of 240 bps. The speculative-grade composite spread is above its one-year moving average of 644 bps and below its five-year moving average of 722 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, we expect U.S. corporate defaults to remain below the long-term average in the short term. On the negative side, an increase in volatility in the financial markets, influenced by weakening economic conditions, could continue to weigh on risky assets.