TEXT-S&P: yield hunters seek speculative-grade assets

(The following statement was released by the rating agency)

Oct 8 - Demand for speculative-grade assets is still brisk, according to aStandard & Poor's Global Fixed Income Research report published today titled"Yield Seekers Flock To Speculative-Grade Assets."

"Several technical measures, such as the current yields, spreads, and issuancelevels, indicate that the speculative-grade bond market remains resilient asinvestors seek more sources of yield," said Standard & Poor's Global FixedIncome Research Managing Director Diane Vazza.

Speculative-grade bond yields are at the lowest levels we have recorded sincewe started tracking our speculative-grade composite bond spread and yields in2003. Our composite average speculative-grade bond yield was 6.62% as of Sept.19, 2012--well below the historical average of 8.83% since the beginning of2004. Investor demand is supporting issuance levels that are on track tosurpass issuance levels of the past several years. For the nine months endedSept. 30, 2012, speculative-grade companies in the U.S. issued $196.8 billionin bonds--higher than the $153.8 billion issued during the same period lastyear.

Speculative-grade issuance has decreased to $7.1 billion from $8.6 billionover the past week as spreads have widened by eight basis points (bps) to 617bps. The speculative-grade spread is tighter than its one-year moving averageof 674 bps and its five-year moving average of 752 bps. Investment-gradeissuance has increased to $11.5 billion from $11.1 billion over the past weekas spreads tightened by 7 bps to 191 bps. The investment-grade spread istighter than its one-year moving average of 211 bps and its five-year movingaverage of 246 bps.

The report is available to subscribers of RatingsDirect on the Global CreditPortal at

. If you are not a RatingsDirectsubscriber, you may purchase a copy of the report by calling (1) 212-438-7280or sending an e-mail to research_request@standardandpoors.com. Ratingsinformation can also be found on Standard & Poor's public Web site by usingthe Ratings search box located in the left column at

.(New York Ratings Team)

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