S&P speculative-grade composite spread widens
Oct 11 - Standard & Poor's investment-grade composite spread widened by 2 basis points (bps) to 190 bps yesterday, and the speculative-grade composite spread widened by 3 bps to 608 bps. By rating, the 'AA' and 'A' spreads widened by 3 bps each to 128 bps and 163 bps, respectively, and the 'BBB' spread widened by 2 bps to 230 bps. The 'BB' spread widened by 2 bps to 416 bps, the 'B' spread widened by 1 bp to 629 bps, and the 'CCC' spread widened by 4 bps to 1,005 bps. By industry, financial institutions, banks, industrials, and telecommunications expanded by 3 bps each to 270 bps, 258 bps, 272 bps, and 293 bps, respectively. Utilities expanded by 1 bp to 198 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 671 bps and its five-year moving average of 753 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.