Bangkok--18 Aug--Standard & Poor's The U.S. rating population shifted back to an investment-grade majority in July, said an article published today by Standard & Poor's. The article, which is titled "U.S. Ratings Distribution: A Swing Back Toward Investment Grade (Premium)," says that currently, speculative-grade firms account for 49.8% of the rated population in the U.S., down from 50.1% in June and 51.2% at the end of 2007. "The shift stems from an increase in defaults and movements to 'NR' as well as a slowdown in the number of new entities with a speculative-grade rating," explained Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. The nonfinancial ratings distribution remains solidly speculative grade, with 63% of entities rated speculative grade and 42% rated below 'BB-'. Financials are predominantly investment grade at 87%. There are 54 (6.8%) financial entities rated below 'BB-'. "The economy is expected to weaken in the coming quarters," Ms. Vazza added, "so we expect rating actions and defaults to continue to rise. Indeed, forward-looking credit metrics based on outlooks and ratings on CreditWatch show that the percentage for firms with a negative bias is elevated, which foretells of future downgrade pressure." Currently, 35% of firms with a speculative-grade rating and 18% of firms with an investment-grade rating have a negative outlook or ratings on CreditWatch with negative implications. If profits fall with the weaker economic environment, we foresee a continued slide in credit quality, with downgrades outpacing upgrades in both investment grade and high yield as well as an increase in the trailing-12-month speculative-grade default rate to 4.9% over the next 12 months. 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 Contacts: Diane Vazza, New York (1) 212-438-2760