Bangkok--25 Feb--Standard & Poor's Deal flow in the primary market for speculative-grade bonds remained tepid in the beginning of 2008, as investors and banks are still working out prices for the billions in backlogged debt, according to an article published yesterday by Standard & Poor's. The report, titled "U.S. High-Yield Prospects: Wan February Fails To Lift Spirits (Premium)," says that market volatility and recessionary pressures along with rising borrowing costs have made firms pause on new issues. "There were few positives for the high-yield market in January and early February," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "With recessionary expectations revised upward and profits expected to trend downward, we see little evidence to support high-yield bonds in the near term." Credit quality for speculative-grade issues deteriorated at the beginning of 2008, with downgrades outnumbering upgrades 4 to 1. The 12-month trailing downgrade ratio (downgrades to total rating actions on a rolling 12-month period) remained elevated, reaching 65% at the end of January. Forward-looking credit metrics based on outlook and CreditWatch status also project significant downgrade risk, as net negative bias reached 18.31%, its highest in 11 months. Ms. Vazza added, "Deal flow in the primary market for speculative-grade bonds remained tepid in the beginning of 2008, as investors and banks are still working out prices for the billions in backlogged debt. Market volatility and recessionary pressures along with rising borrowing costs have made firms pause on new issues. Indeed, speculative-grade yields have risen to 9.85% in February, up from 7.8% a year ago." 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