TEXT-S&P speculative-grade composite spread expands

(The following statement was released by the rating agency)

Oct 1 - Standard & Poor's investment-grade composite spread expanded by 3 basis points (bps) to 193 bps Friday, and the speculative-grade composite spread expanded by 2 bps to 617 bps. By rating, the 'AA' and 'A' spreads widened by 2 bps each to 131 bps and 165 bps, respectively, and the 'BBB' spread expanded by 3 bps to 235 bps. The 'BB' and 'CCC' spreads expanded by 1 bp each to 424 bps and 1,009 bps, respectively, and the 'B' spread widened by 4 bps to 644 bps.

By industry, financial institutions and utilities expanded by 2 bps each to 272 bps and 202 bps, respectively. Banks and industrials widened by 3 bps each to 270 bps and 276 bps, respectively, and telecommunications expanded by 1 bp to 298 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 its 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 677 bps and its five-year moving average of 752 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. 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;))