TEXT-S&P speculative-grade composite spread remains flat
Nov 27 - Standard & Poor's investment-grade composite spread widened by 1 basis point (bp) to 186 bps yesterday, and the speculative-grade composite spread remained flat at 610 bps. By rating, the 'AA' and 'A' spreads remained flat at 128 bps and 157 bps, respectively, and the 'BBB' spread expanded by 1 bp to 222 bps. The 'BB' spread contracted by 1 bp to 413 bps, the 'B' spread widened by 1 bp to 623 bps, and the 'CCC' spread remained flat at 995 bps. By industry, financial institutions, industrials, and telecommunications remained flat at 252 bps, 267 bps, and 292 bps, respectively. Banks contracted by 1 bp to 249 bps, and utilities expanded by 1 bp to 190 bps. The investment-grade composite spread is lower than both its one-year moving average of 207 bps and its five-year moving average of 247 bps. The speculative-grade composite spread is lower than both its one-year moving average of 657 bps and its five-year moving average of 758 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.
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