Bangkok--27 Jun--Standard & Poor's After a two-month rally, the high-yield bond market has moved sideways in June, said an article published today by Standard & Poor's. The article, which is titled "U.S. High-Yield Prospects: High-Yield Market Unlikely To Be Hot This Summer (Premium)," says that spreads on our high-yield composite index are currently at the 640-basis point (bp) level, more in line with default expectations of 4%-6% one year forward. The rate of downgrades has accelerated this year, with 186 downgrades through June 11 versus 151 in the second half of 2007. The trailing-12-month downgrade ratio (the percentage of downgrades to total rating actions during a 12-month period) moved to 71% at the beginning of June, its highest level since March 2004. Forward-looking credit metrics based on outlook and CreditWatch status also project significant downgrade risk, with net negative bias at 23.46%, its highest level since the end of 2003. Deal flow into the high-yield primary market remains relatively slow, though May showed signs of life with $12.6 billion in new issuance. Through June 20, there has been approximately $25 billion in high-yield new debt issuance, well behind the $100 billion market reached at the end of June in 2007 and $65 billion through the first half of 2006. "The market usually enters a lull in the summer months, so we expect supply conditions to remain relatively tepid," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. The trailing-12 month speculative-grade default rate accelerated to 1.89%, with six (including three confidentially rated issuers) U.S.-based companies defaulting in May. We project the trailing-12-month speculative-grade default rate to climb to 4.7% four quarters out. RatingsDirect is the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. The standard version of this article is part of our standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. 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