Bangkok--18 Jul--Standard & Poor's The U.S. nonfinancial ratings mix has deteriorated fairly steadily over the last 20 years, with high-yield's share of nonfinancial issuers rising to 64% from 43% between 1988 and 2007, said an article published yesterday by Standard & Poor's. The article, which is titled "U.S. Credit Comment: Toxic Nonfinancial Ratings Mix Pressures Default Risk," says that this has left the bond market in unprecedented territory at a time when the economic growth and earning prospects are dampening, lending conditions are tightening, and default pressure is rising. "The situation today, though somewhat reminiscent of last cycles, has some distinguishing traits," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "For one, credit markets in general have lead the downturn, with significant price shock and extreme spread widening starting in July of last year in both the high-yield bond market and leveraged loan market and securitized markets locking down." The extent of risk in the ratings mix is also more pronounced, with 11% of nonfinancial firms in the U.S. rated 'B-' or lower. "This does not bode well for defaults based on the historical experience," Ms. Vazza added. The one-year average transition to default for nonfinancials between 1981 and 2007 was 10% for 'B-' rated firms and 26% for 'CCC' and below rated firms. Moreover, downward transition rates tend to increase above the aforementioned averages for the 'CCC' category prior to and during recessions as credit quality becomes less stable. This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. 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