(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.
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. (New York Ratings Team)