S&P speculative-grade composite spread narrows
Dec 5 - Standard & Poor's investment-grade composite spread widened by 1 basis point (bp) to 188 bps yesterday, and the speculative-grade composite spread narrowed by 2 bps to 597 bps. By rating, the 'AA' spread expanded by 1 bp to 128 bps, the 'A' spread remained flat at 158 bps, and the 'BBB' spread widened by 1 bp to 225 bps. The 'BB' spread contracted by 1 bp to 401 bps, the 'B' spread narrowed by 2 bps to 612 bps, and the 'CCC' spread tightened by 3 bps to 976 bps. By industry, financial institutions remained flat at 249 bps, and banks and industrials tightened by 1 bp each to 245 bps and 264 bps, respectively. Utilities expanded by 1 bp to 192 bps, and telecommunications widened by 7 bps to 294 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.
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