Bangkok--16 Apr--Standard & Poor's About $94 billion of investment-grade and $22 billion of speculative-grade debt will mature in the last three quarters of 2008, according to an article published today by Standard & Poor's. The report, titled, "U.S. Credit Comment: Near-Term Refunding Risk Small, Though Default Pressures Continue To Mount," says that the consumer discretionary sector will face the most speculative-grade refunding pressure, with close to $6.7 billion in bonds maturing in 2008. "While we do not consider bond refunding as a strong default trigger for the speculative-grade nonfinancial sector in 2008, we do not downplay other risks," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "For firms that do roll over debt, their debt most likely will be priced at a higher yield because risk premiums have risen more for high-yield firms more than base rates have fallen." The amount of maturing bonds will increase over the next few years, with exceptionally high volumes of maturing bonds in 2011 through 2014, and maturities should spike in 2011, as a glut of bonds mature that were issued during the issuance bubble in 2001. U.S. corporate bond issuance set records in 2007, with just over $1.05 trillion in rated issuance. A record $136.7 billion in high-yield and $913 billion in investment-grade bonds were issued in 2007. However, the market has slowed considerably since last summer. While investment-grade firms have continued to find financing in the first quarter ($193 billion in debt), the high-yield bond market has been relatively frozen, with only $5.5 billion, down 87% from first-quarter 2007. Ms. Vazza added, "Currently, the average high-yield firm might pay a 10% yield to maturity on new five-year bonds, assuming investors are interested in the deal. As firms see profits shrink during the next few quarters, we anticipate erosion in interest coverage multiples and some firms may begin to bump up against covenants. Moreover, as other avenues for financing shut down, firms may try to refinance debt in the bond market, creating more pressure than expected. It is also likely that firms in the most need of capital will be the ones with the inability to access it." 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 23 countries and markets, 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]