(The following statement was released by the rating agency)
Oct 11 - Standard & Poor's investment-grade composite spread widened by 2 basis points (bps) to 190 bps yesterday, and the speculative-grade composite spread widened by 3 bps to 608 bps. By rating, the 'AA' and 'A' spreads widened by 3 bps each to 128 bps and 163 bps, respectively, and the 'BBB' spread widened by 2 bps to 230 bps. The 'BB' spread widened by 2 bps to 416 bps, the 'B' spread widened by 1 bp to 629 bps, and the 'CCC' spread widened by 4 bps to 1,005 bps.
By industry, financial institutions, banks, industrials, and telecommunications expanded by 3 bps each to 270 bps, 258 bps, 272 bps, and 293 bps, respectively. Utilities expanded by 1 bp to 198 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 211 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 671 bps and its five-year moving average of 753 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)