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S&P speculative-grade composite spread narrows
December 5, 2012 / 3:40 PM / 5 years ago

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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