September 17, 2012 / 8:53 PM / 5 years ago

S&P speculative-grade composite spread tightens

Sept 17 - Standard & Poor's investment-grade composite spread contracted by
10 basis points (bps) to 190 bps and the speculative-grade composite spread
contracted by 14 bps to 600 bps. By rating, the 'AA', 'A', and 'BBB' spreads
narrowed by 11 bps each to 124 bps, 160 bps, and 234 bps, respectively. The 'BB'
spread tightened by 12 bps to 408 bps, the 'B' spread tightened by 13 bps to 625
bps, and the 'CCC' spread tightened by 16 bps to 1,004 bps.

By industry, financial institutions and banks narrowed by 11 bps each to 269 
bps and 268 bps, respectively, and industrials and utilities contracted by 10 
bps each to 272 bps and 199 bps, respectively. Telecommunications narrowed by 
13 bps to 291 bps. 

The investment-grade and speculative-grade spreads are both down from their 
highs reached in October. The investment-grade composite spread is lower than 
both its one-year moving average of 213 bps and its five-year moving average 
of 246 bps. The speculative-grade composite spread is lower than both its 
one-year moving average of 683 bps and its five-year moving average of 750 
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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