TEXT-S&P speculative-grade composite spread narrows
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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