TEXT-S&P speculative-grade composite spread narrows

Tue Dec 4, 2012 10:45am EST

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Dec 4 - Standard & Poor's investment-grade composite spread tightened by 1
basis point (bp) to 187 bps yesterday, and the speculative-grade composite
spread narrowed by 4 bps to 599 bps. By rating, the 'AA' spread contracted by 2
bps to 127 bps, and the 'A' and 'BBB' spreads narrowed by 1 bp each to 158 bps
and 224 bps, respectively. The 'BB' spread contracted by 3 bps to 402 bps, the
'B' spread narrowed by 5 bps to 614 bps, and the 'CCC' spread tightened by 7 bps
to 979 bps.

By industry, industrials and utilities tightened by 1 bp each to 265 bps and 
191 bps, respectively. Financial institutions and telecommunications narrowed 
by 2 bps each to 249 bps and 287 bps, respectively, and banks contracted by 3 
bps to 246 bps.

The investment-grade composite spread is lower than both its one-year moving 
average of 206 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 654 bps and its five-year moving average of 759 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.(New York Ratings Team)
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