July 16 - The forest products and building materials sector speculative-grade spread is trending wider on average than most nonfinancial sector speculative-grade spreads, said an article published today by Standard & Poor's Global Fixed Income Research, titled "The Forest Products And Building Materials Sector's Wide Speculative-Grade Spread Reflects High Bond Premiums In Building Materials And Products." "The sector's 30-day moving average is 780 basis points (bps), whereas the speculative-grade composite spread 30-day moving average is 691 bps," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. The forest products and building materials speculative-grade spread is a composite of the building materials and products subsector (67% of the total), which has a speculative-grade spread of 674 bps, and the paper and forest products subsector (33%), which has a speculative-grade spread of 564 bps. "The depressed housing market supports the wide spreads," said Ms. Vazza. The S&P/Case-Shiller Home Price Indices prices fell by 1.9% for the year ended April 30, and the Conference Board Consumer Confidence Index fell by 2.4 units to 62 units in June. In our most recent potential bond downgrades report, we noted that the forest products and building materials sector has a high current negative bias of 22% (see "Credit Trends: Bond Downgrade Potential In Emerging And Developed Markets, Including The U.S. And Europe: The Count Continues To Increase," published July 9, 2012, on RatingsDirect on the Global Credit Portal). Negative bias is the proportion of issuers with negative rating outlooks or ratings on CreditWatch with negative implications. Eleven U.S.-based forest products and building materials issuers are on the potential bond downgrades list. Over the past week, the Credit Default Swap North America High Yield Index spread widened by 17 bps to 597 bps and is tighter than at the start of the year when it was 662 bps. Meanwhile, the Credit Default Swap North America Investment Grade Index spread widened by 5 bps to 144 bps and is wider than at the start of the year when it was 138 bps. Speculative-grade issuance increased to $2.2 billion from $0.03 billion over the past week, with the spread remaining flat at 679 bps. The speculative-grade spread is tighter than its one-year moving average of 684 bps and tighter than its five-year moving average of 741 bps. Investment-grade issuance increased to $13.8 billion from $0.04 billion, with the spread tightening by 1 bp to 219 bps. The investment-grade spread remains wider than its one-year moving average of 211 bps and tighter than its five-year moving average of 244 bps. The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to firstname.lastname@example.org. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.