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TEXT-S&P speculative-grade composite spread narrows
December 13, 2012 / 3:30 PM / in 5 years

TEXT-S&P speculative-grade composite spread narrows

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 

Our Standards:The Thomson Reuters Trust Principles.
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