Bangkok--14 Nov--Standard & Poor's Although financial market uncertainty continues, we expect the number of defaults in the remainder of 2007 to remain suppressed among corporate nonfinancial and financial issuers, according to an article recently published by Standard & Poor's. The report, titled "U.S. Default Outlook: Changes In Credit Environment To Escalate Defaults In 2008 And Beyond (Premium)," says that during the next several months, the trajectory of default rates is expected to escalate based on changes in the credit-pricing environment and a slowing of the economy, as well as a rating mix with a record-high representation of speculative-grade ratings. "Given the number of defaults this year to date, we estimate that the default rate for 2007 will be no higher than 1.4%," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "In the U.S., a total of 19 defaults among entities rated speculative grade is necessary to meet our projection. As of Sept. 30, only 12 had been realized. If the pace of defaults in the past two months is maintained in the fourth quarter, the default rate could be lower than our estimate of 1.4%. Though default risk is rising, this year's default count continues to be constrained in part because of limited refunding requirements and structural concessions that avert payment default." Defaults continue to trail below average based on par amount as well. The 12 U.S. defaults recorded in the first three quarters of 2007 affected debt worth $4 billion. However, this is a minuscule portion of the total outstanding U.S. high-yield volume estimated at nearly $1 trillion. As of Sept. 30, we identified a total of 71 rated issuers in the U.S. with rated debt worth $32 billion as weakest links, indicating that these issuers are closest to the default threshold based on our ratings of 'B-' or lower on those entities coupled with a negative outlook or on CreditWatch with negative implications. Even if all of the weakest links defaulted, the affected par amount would be modest. Ms. Vazza added, "The muted 2007 year-end projection does not indicate that we expect corporate credit risk to diminish. Instead, it signifies that corporate defaults--though slow to materialize--are on the upward leg of an ascent that will gain momentum in the second half of 2008 and likely continue into 2009. A material risk remains that defaults could be significantly more pronounced and severe beyond the one-year forecast horizon." The report is available to RatingsDirect subscribers who have upgraded their package to include the Global Fixed Income Research add-on. RatingsDirect is the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber with the Global Fixed Income Research add-on, please contact your local Standard & Poor's representative or [email protected] for further information. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided. Media Contact: Mimi Barker, New York (1) 212-438-5054, [email protected] Analyst Contact: Diane Vazza, New York (1) 212-438-2760 Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com. Key Contacts: Americas Media Relations: (1) 212-438-6667 media_ [email protected] Americas Customer Service: (1) 212-438-7280 [email protected]