September 26, 2012 / 8:57 PM / 5 years ago

S&P speculative-grade composite spread widens

Sept 26 () - Standard & Poor's investment-grade composite spread narrowed by 1 basis point (bp) to 195 bps yesterday, and the speculative-grade composite spread widened by 5 bps to 600 bps. By rating, the 'AA', 'A', and 'BBB' spreads contracted by 1 bp each to 133 bps, 168 bps, and 237 bps, respectively. The 'BB' spread widened by 4 bps to 415 bps, and the 'B' and 'CCC' spreads expanded by 5 bps each to 625 bps and 992 bps, respectively. By industry, financial institutions, banks, and utilities narrowed by 1 bp each to 275 bps, 269 bps, and 205 bps, respectively. Industrials remained unchanged at 274 bps and telecommunications widened by 1 bp to 296 bps. The investment-grade and speculative-grade spreads are both down from their highs reached last October. The investment-grade composite spread is lower than both one-year moving average of 212 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 678 bps and its five-year moving average of 751 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.(New York Ratings Team)

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