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S&P speculative-grade composite spread widens

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(The following statement was released by the rating agency)

Oct 11 - Standard & Poor's investment-grade composite spread widened by 2basis points (bps) to 190 bps yesterday, and the speculative-grade compositespread widened by 3 bps to 608 bps. By rating, the 'AA' and 'A' spreads widenedby 3 bps each to 128 bps and 163 bps, respectively, and the 'BBB' spread widenedby 2 bps to 230 bps. The 'BB' spread widened by 2 bps to 416 bps, the 'B' spreadwidened by 1 bp to 629 bps, and the 'CCC' spread widened by 4 bps to 1,005 bps.

By industry, financial institutions, banks, industrials, andtelecommunications expanded by 3 bps each to 270 bps, 258 bps, 272 bps, and293 bps, respectively. Utilities expanded by 1 bp to 198 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 671 bps and its five-year moving average of 753bps. 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;))