Dec 13 - Standard & Poor's investment-grade composite spread remained flat
at 187 basis points (bps) yesterday, and the speculative-grade composite spread
narrowed by 8 bps to 573 bps. By rating, the 'AA', 'A', and 'BBB' spreads
remained flat at 128 bps, 158 bps, and 224 bps, respectively. The 'BB' and 'B'
spreads contracted by 6 bps each to 384 bps and 589 bps, respectively, and the
'CCC' spread tightened by 8 bps to 950 bps.
By industry, financial institutions remained flat at 246 bps, and utilities
widened by 1 bp to 192 bps. Banks and industrials tightened by 1 bp each to
242 bps and 259 bps, respectively, and telecommunications tightened by 2 bps
to 284 bps.
The investment-grade composite spread is lower than both its one-year moving
average of 205 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 650 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