TEXT-S&P speculative-grade composite spread narrows
Oct 8 - Standard & Poor's investment-grade composite spread tightened by 3 basis points (bps) to 184 bps Friday, and the speculative-grade composite spread tightened by 8 bps to 606 bps. By rating, the 'AA', 'A', and 'BBB' spreads tightened by 3 bps each to 122 bps, 156 bps, and 225 bps, respectively. The 'BB' spread tightened by 7 bps to 414 bps, the 'B' spread tightened by 8 bps to 630 bps, and the 'CCC' spread tightened by 3 bps to 1,003 bps. By industry, financial institutions contracted by 4 bps to 264 bps, and banks contracted by 6 bps to 255 bps. Industrials and utilities contracted by 3 bps each to 267 bps and 193 bps, respectively, and telecommunications contracted by 5 bps to 288 bps. The investment-grade and speculative-grade spreads are both down from their highs reached last October. The investment-grade composite spread is lower than both its one-year moving average of 211 bps and its five-year moving average of 246 bps. The speculative-grade composite spread is lower than both its one-year moving average of 673 bps and its five-year moving average of 752 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. Standard & Poor's, a part of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of credit ratings. With offices in 23 countries, Standard & Poor's is an important part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with information and independent benchmarks for their investment and financial decisions.