TEXT-S&P speculative-grade composite spread widens
Jan 9 - Standard & Poor's investment-grade composite spread remained flat at 178 basis points (bps) yesterday, and the speculative-grade composite spread widened by 1 bp to 537 bps. By rating, the 'AA', 'A', and 'BBB' spreads remained flat at 122 bps, 150 bps, and 213 bps, respectively. The 'BB' spread contracted by 2 bps to 358 bps, the 'B' spread expanded by 2 bps to 561 bps, and the 'CCC' spread remained flat at 893 bps. By industry, utilities remained flat at 184 bps, and financial institutions, banks, and industrials contracted by 1 bp each to 236 bps, 225 bps, and 245 bps, respectively. Telecommunications widened by 1 bp to 267 bps. The investment-grade composite spread is lower than both its one-year moving average of 202 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 639 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.