Nov 27 - Standard & Poor's investment-grade composite spread widened by 1
basis point (bp) to 186 bps yesterday, and the speculative-grade composite
spread remained flat at 610 bps. By rating, the 'AA' and 'A' spreads remained
flat at 128 bps and 157 bps, respectively, and the 'BBB' spread expanded by 1 bp
to 222 bps. The 'BB' spread contracted by 1 bp to 413 bps, the 'B' spread
widened by 1 bp to 623 bps, and the 'CCC' spread remained flat at 995 bps.
By industry, financial institutions, industrials, and telecommunications
remained flat at 252 bps, 267 bps, and 292 bps, respectively. Banks contracted
by 1 bp to 249 bps, and utilities expanded by 1 bp to 190 bps.
The investment-grade composite spread is lower than both its one-year moving
average of 207 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 657 bps and its five-year moving average of 758 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