กรุงเทพฯ--11 ธ.ค.--Standard & Poor's
High-yield cash spreads exceeded 500 basis points (bps) in the middle of November for the first time since November 2004, according to an article published by Standard & Poor's today. The report, titled "U.S. High-Yield Prospects: Crunch Ahead Of Christmas Crackle (Premium)," says that spreads continued to push up another 60 bps and are at their widest since August 2003. In addition, the high-yield distressed ratio jumped to 4.9% on Nov. 15 from 2.3% on Oct. 15.
"The high-yield market had a tough month in November, with spreads increasing 134 basis points over the month to 563 basis points by Dec. 5," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Market volatility remains high and investor sentiment continues to be low. With a potential rate cut looming, investors seem to be in a wait-and-see mode with little interest in taking on additional risk."
The primary market has been fairly quiet in November, with only $4 billion in high-yield new issuance. The leveraged-loan market has done somewhat better, as $49 billion in new loans were issued during the first half of the month versus $48 billion in October. Major deals, such as Chrysler's loan offering, have been delayed or cancelled. It is likely that many deals planned for late 2007 will be pushed back into the first quarter of 2008.
Ms. Vazza added, "Banks, which have written down billions of mortgage related assets, have demanded a higher premium to lend to one another, which has been reflected in the LIBOR rate. There is a risk that banks will continue to tighten lending standards and demand higher premiums and that less creditworthy borrowers will eventually feel the pinch even without a dramatic change in industry dynamics. Deal flow in the primary market for speculative-grade bonds has been slow and probably will remain tepid until investors overcome their uncertainty and feel the correction is over."
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Media Contact:
Mimi Barker, New York (1) 212-438-5054, mimi_barker@standardandpoors.com
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760