TEXT-S&P speculative-grade composite spread narrows

(The following statement was released by the rating agency)

Oct 8 - Standard & Poor's investment-grade composite spread tightened by 3basis points (bps) to 184 bps Friday, and the speculative-grade composite spreadtightened by 8 bps to 606 bps. By rating, the 'AA', 'A', and 'BBB' spreadstightened by 3 bps each to 122 bps, 156 bps, and 225 bps, respectively. The 'BB'spread tightened by 7 bps to 414 bps, the 'B' spread tightened by 8 bps to 630bps, and the 'CCC' spread tightened by 3 bps to 1,003 bps.

By industry, financial institutions contracted by 4 bps to 264 bps, and bankscontracted by 6 bps to 255 bps. Industrials and utilities contracted by 3 bpseach to 267 bps and 193 bps, respectively, and telecommunications contractedby 5 bps to 288 bps.

The investment-grade and speculative-grade spreads are both down from theirhighs reached last October. The investment-grade composite spread is lowerthan both its one-year moving average of 211 bps and its five-year movingaverage of 246 bps. The speculative-grade composite spread is lower than bothits one-year moving average of 673 bps and its five-year moving average of 752bps. We expect continued volatility in the near term, especially in thespeculative-grade segment, which could result from both positive and negativefactors. On the positive side, we expect U.S. corporate defaults to remainbelow the long-term average in the short term. On the negative side, anincrease in volatility in the financial markets, influenced by weakeningeconomic conditions, could continue to weigh on risky assets.

Standard & Poor's, a part of The McGraw-Hill Companies (NYSE:MHP), is theworld's foremost provider of credit ratings. With offices in 23 countries,Standard & Poor's is an important part of the world's financial infrastructureand has played a leading role for 150 years in providing investors withinformation and independent benchmarks for their investment and financialdecisions. For more information, visit

.(New York Ratings Team)

((e-mail: pam.niimi@thomsonreuters.com; Reuters Messaging:pam.niimi.reuters.com@reuters.net; Tel:1-646-223-6330;))