Bangkok--15 Nov--Standard & Poor's Volatility returned in late October, sending high-yield cash spreads wider, according to an article published today by Standard & Poor's. The report, titled "U.S. High-Yield Prospects: Difficult Quest For Stability (Premium)," says that the high-yield market has followed the equity market, moving on earnings and economic news. "Despite low issuance in August and early September, the combined leveraged-loan and high-yield new issuance year to date has matched the full-year 2006 amount, with more than $113 billion in high-yield bonds and $500 billion in leveraged loans," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The current forward leveraged finance calendar is $282 billion, of which 34% or $95 billion are bonds. Approximately $78 billion in bonds and $139 billion in loans on the forward calendar are tied to LBOs or M&As." Credit metrics for speculative-grade credits were stable in September, with 17 downgrades and 12 upgrades. The 12-month trailing downgrade ratio (downgrades to total rating actions) decreased by 1% to 60% in September. Forward-looking credit metrics based on outlook and CreditWatch status, however, project moderate future downgrade risk, as net negative bias is 16.4%, slightly under the 16.8% two-year average. As of Sept. 30, 31 firms had developing risks. Of the 1,277 parent-level U.S. high-yield issuers rated by Standard & Poor's Ratings Services on Sept. 30, 2007, we have evaluated the prospects for 1,245 issuers with debt outstanding. A study of their CreditWatch status and outlooks identified 156 issuers as potential upgrade candidates (seven more than reported in August) and 15 issuers as potential rising stars. Ms. Vazza added, "One default in September pushed the 12-month trailing U.S. speculative-grade default rate down to a record-low 1.13% from 1.27% recorded in August. We continue to hold our default rate forecast to 1.4% for the end of 2007, though it would take about nine additional defaults to reach that target. We emphasize that structural concessions in many deals will most likely soften the chance for a material increase in defaults in the near term." 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.