Distress Ratio At Its Lowest Point In More Than Two Years, Article Says

After a protracted period of economic and financial stress that began in the second half of 2007, credit conditions appear favorable at the start of 2010, said an article published today by Standard & Poor's.


The speculative-grade corporate spread is now lower than at any point in 2009, closing at 586 basis points (bps) on Jan. 15. Along with this, the distress ratio is now solidly below its long-term average, at 10.4% as of Jan. 15. This is down from 14.6% in December, according to the article, titled "U.S. Distressed Debt Monitor: Distress Ratio Falls To 10%, An Optimistic Start To The New Year."

Standard & Poor's distress ratio is defined as the number of distressed securities divided by the total number of speculative-grade-rated issues. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 bps relative to Treasuries.

"The homebuilders/real estate companies and insurance sectors are posting the highest debt-based distress ratios, at 75% and 28%, respectively," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.

"In addition, the high technology sector has a debt-based distress ratio in excess of its traditional, issue-based measure," said Ms. Vazza. "This reveals that a disproportionate amount of speculative-grade debt in this sector is attributable to distressed companies."

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Thai futures exchange postpones trading of 10 baht gold futures

Thailand Futures Exchange PCL (TFEX) has postponed the launch of 10 baht gold futures to give the Gold Traders Association and Thailand Gold Retail Club more time to create understanding among various parties and prepare for trading the new product.


“TFEX has notified the Association and the Club about the origins, reasons and results from a discussion with its members, including five gold-related agents, all agree that trading 10 baht gold futures will provide more alternatives to investors of gold futures. Currently, over half of the investors in gold futures have traded in SET50 futures, so they are familiar with futures already,” revealed TFEX Managing Director Kesara Manchusree.

TFEX requested the Association and Club to help create understanding of this new product among its members and potential investors and noted that TFEX stood ready to provide both educational activities and business information. Currently, the Securities and Exchange Commission permits retail gold traders to operate both selling agent (SA) and introducing agent (IA).

All TFEX members have already invested in operating platforms for the 10 baht gold futures, and are under testing process in parallel with providing knowledge and marketing activities prior to trading this product. Therefore, the postponing the launch of this product will affect all TFEX members and more than 500,000 investors in the capital market. TFEX will have to clarify and request for collaboration from its members to explain this issues to investors about the reasons and necessities.

TFEX understands the pressures that gold shops face, including the economic recession, rising gold prices, online gold trading, and changing consumer behavior on buying and selling gold ornaments. TFEX will discuss the new launch date with its members and announce the date to the public,” concluded Ms. Kesara.