TEXT-S&P: spreads patterns of 2012 contradict 2011

Tue Dec 4, 2012 12:55pm EST

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Dec 4 - As we near the end of 2012, a look back at spreads through the first
three quarters paints a different picture compared to what occurred in 2011,
according to a recently published Standard & Poor's Ratings Services report
titled, "Spreads Patterns Of 2012 Contradict 2011. 

"In 2012, both the high yield and investment-grade composite spreads tightened 
to 617 basis points from 709 and to 193 from 223, respectively. By comparison, 
through September 2011 the speculative-grade composite spread widened to 781 
basis points from 538, and the investment-grade composite spread to 227 from 
177," said Diane Vazza, head of Standard & Poor's Global Fixed Income 
Research. In September 2012, speculative-grade issuance peaked at $34.9 
billion, as yield-hungry investors flocked towards the asset class. In 
addition, although concerns over the eurozone's financial stability persist, 
the region's economic volatility is not at the same level as it was in 2011, 
when the spreads widened.

Speculative-grade issuance has increased to $1.4 billion from $400 million 
over the past week as the spreads have tightened by 1 bp to 610. The 
speculative-grade spread is tighter than both its one-year moving average of 
656 bps and its five-year moving average of 759 bps. Investment-grade issuance 
has increased to $23.6 billion from $3.6 billion over the past week, as the 
spreads have widened by 2 bps to 188. The investment-grade spread is tighter 
than both its one-year moving average of 207 bps and its five-year moving 
average of 247 bps.

Over the past week, the Credit Default Swap North America High Yield Index 
spread has tightened by 9 bps to 509, and it's tighter than it was at the 
start of the year when it was 662 bps. The Credit Default Swap North America 
Investment Grade Index has widened by 2 bps to 141, and it is wider than it 
was at the start of the year when it was 138 bps.

The report is available to subscribers of RatingsDirect on the Global Credit 
Portal at www.globalcreditportal.com. If you are not a RatingsDirect 
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 
or sending an e-mail to research_request@standardandpoors.com. Ratings 
information can also be found on Standard & Poor's public Web site by using 
the Ratings search box located in the left column at www.standardandpoors.com.
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