Bangkok--1 Aug--Standard & Poor's Defaults in the U.S. have begun to climb visibly as expected, with 37 defaults in the first half of the year, said an article published today by Standard & Poor's. The article, which is titled "U.S. Corporate Default Outlook: Corporate Hatchet Meter Kicks Into Motion (Premium)," says that this is almost equivalent to the combined 16 and 22 defaults in 2007 and 2006, respectively. If the six defaults in July through the 28th were included, the total for the year easily exceeds the total in the two prior years. "We expect defaults to continue to gain momentum through the rest of 2008 and 2009," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Given the prevailing high levels of market volatility, a material risk remains that defaults could be significantly more pronounced and severe, especially if this recession is deeper and longer than expected." Therefore, we simulate the default-rate impact under two alternative economic scenarios, one worse than the baseline and one better, both of which have an estimated 20% chance of occurring. In our baseline scenario (to which we've assigned a 60% probability), we expect the U.S. speculative-grade default rate to escalate to a mean forecast of 4.9% in the next 12 months (through June 2009). To reach the baseline forecast of 4.9%, 79 issuers must default in the next 12 months. Under our two alternative economic scenarios, the pessimistic scenario yields a mean 12-month default rate of 8.5%, nearly double the long-term average of 4.4% but still below the peak of 10.8% in 2001-2002. The optimistic scenario yields an average default rate of 3.4%, below the long-term average. 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 Contacts: Diane Vazza, New York (1) 212-438-2760